Earning frequent flyer miles - is this cheating???

I have a Visa debit card with my bank in partnership with a major US
airline. I get one FF mile for every one dollar I spend using the
card. I was thinking I could earn a ton of miles by doing this...

I deposit $5,000 (or any dollar amount) into my checking account that
the debit card is attached to. I own my own business and have a
credit card machine/merchant account. I then slide my debit card in
the terminal at my office, enter my PIN #, and charge the debit card
$5,000. The merchant bank charges me a flat $0.50 fee for the
transaction. The $5,000 is deducted from my personal checking account
the card is attached to and is transferred into my business bank
account. So I'm essentially running money in circles. BUT, I will get
5,000 frequent flyer miles with the airline for the transaction.

Would this be considered fraud? You could rack up a ton of miles doing
this and it costs basically nothing.

In message . com
" wrote:

I have a Visa debit card with my bank in partnership with a major US
airline. I get one FF mile for every one dollar I spend using the
card. I was thinking I could earn a ton of miles by doing this...

I deposit $5,000 (or any dollar amount) into my checking account that
the debit card is attached to. I own my own business and have a
credit card machine/merchant account. I then slide my debit card in
the terminal at my office, enter my PIN #, and charge the debit card
$5,000. The merchant bank charges me a flat $0.50 fee for the
transaction. The $5,000 is deducted from my personal checking account
the card is attached to and is transferred into my business bank
account. So I'm essentially running money in circles. BUT, I will get
5,000 frequent flyer miles with the airline for the transaction.

Would this be considered fraud? You could rack up a ton of miles doing
this and it costs basically nothing.

Read your merchant agreements, and also contact your accountant to see
what sort of tax you'll end up paying as a result of the additional
income.

--
You can get more with a kind word and a 2x4 than just a kind word.

I then slide my debit card in the terminal at my office, enter my
PIN #, and charge the debit card $5,000.

I think you'll find that you only get miles for signature
transactions, not PIN transactions. If you want to pay your bank 2.5%
or whatever your credit card discount is for miles, that would be fine
with them.

Some years ago, the AAA let members buy traveler's checks at par (that
is, no fee) and charge them to your credit card. A bright fellow in
Colorado got five frequent flyer credit cards and every month went to
his AAA office and bought $100,000 in TC's. Then at the end of the
month, he'd pay off each bill and repeat. The credit card companies
finally changed the rules to treat TC's as cash advances, but not until
he'd racked up several million FF miles. As I recall, he put the money
in the bank between the time he bought the TCs and paid off the cards,
so he made a few hundred bucks in interest, too.

But that doesn't work any more.

In article , John L wrote:

Some years ago, the AAA let members buy traveler's checks at par (that
is, no fee) and charge them to your credit card. A bright fellow in
Colorado got five frequent flyer credit cards and every month went to
his AAA office and bought $100,000 in TC's. Then at the end of the
month, he'd pay off each bill and repeat. The credit card companies
finally changed the rules to treat TC's as cash advances, but not until
he'd racked up several million FF miles.

AAA was the one losing on the deal; they were paying the merchant fee.

In my area, AAA changed its rules first: they stopped allowing free
travellers' checks to be charged to credit cards in general, but continued
to allow it for their own house-branded credit card. That blocked the FF
mile collectors.

It wasn't exactly as easy as your post makes it sound. AAA didn't have
high-denomination TChecks, so it took around 30-45 minutes to do the
paperwork on the transaction when buying them, including the initial
signatures, and another 15-30 minutes to deposit them to a bank account,
including the matching signatures. There were also federal currency
reporting rules that had to be followed precisely, or a US frequent flyer
might find himself in a Federal penitentiary on charges of structuring
transactions and/or money laundering. (Those same laws were why AAA limited
customers to $10,000 of TChecks per day).

--
Randy Hudson

In message (John L) wrote:

I then slide my debit card in the terminal at my office, enter my
PIN #, and charge the debit card $5,000.

I think you'll find that you only get miles for signature
transactions, not PIN transactions. If you want to pay your bank 2.5%
or whatever your credit card discount is for miles, that would be fine
with them.

Some years ago, the AAA let members buy traveler's checks at par (that
is, no fee) and charge them to your credit card. A bright fellow in
Colorado got five frequent flyer credit cards and every month went to
his AAA office and bought $100,000 in TC's. Then at the end of the
month, he'd pay off each bill and repeat. The credit card companies
finally changed the rules to treat TC's as cash advances, but not until
he'd racked up several million FF miles. As I recall, he put the money
in the bank between the time he bought the TCs and paid off the cards,
so he made a few hundred bucks in interest, too.

But that doesn't work any more.

Unless you can get a 0% balance transfer deal -- Even if it's just
promotional, you can get away with it a few times during the promotional
period.

I keep an eye out for low interest offers myself, if I see one below my
bank's low interest savings account I jump on it, borrow at 0.9% and
invest at 4%+ then rinse and repeat since companies that offer it once
usually offer it again.

--
You can get more with a kind word and a 2x4 than just a kind word.

wrote:
I have a Visa debit card with my bank in partnership with a major US
airline. I get one FF mile for every one dollar I spend using the
card. I was thinking I could earn a ton of miles by doing this...

I deposit $5,000 (or any dollar amount) into my checking account that
the debit card is attached to. I own my own business and have a
credit card machine/merchant account. I then slide my debit card in
the terminal at my office, enter my PIN #, and charge the debit card
$5,000. The merchant bank charges me a flat $0.50 fee for the
transaction. The $5,000 is deducted from my personal checking account
the card is attached to and is transferred into my business bank
account. So I'm essentially running money in circles. BUT, I will get
5,000 frequent flyer miles with the airline for the transaction.

Would this be considered fraud? You could rack up a ton of miles doing
this and it costs basically nothing.


As previously and wisely advised, you really need to read YOUR merchant
account agreement.

I can tell you that AMEX definitely will NOT go for it. They plant a ton
of little bugs that will throw up a flag if they get the slightest hint
that you are manipulating cash advances, rewards, etc. You call it money
running in circles. They could call it money laundering.

Personally, 5k miles isn't that much to go through the trouble for.