# Manufactured spending to get points



## sags (May 15, 2010)

Somebody will always figure out a way to scam the system. 

People have been "manufacturing" spending to gain massive amounts of points on credit cards.

http://www.cbc.ca/news/business/aer...visa-mastercard-royal-canadian-mint-1.4390911


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## kcowan (Jul 1, 2010)

It has been around a long time but most of the easy methods have been blocked.


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## james4beach (Nov 15, 2012)

The guy basically came up with a money printing machine. Amazing! I looked into some ways before but never figured out one that worked net of fees and slippage.

I heard CBC's interview with this guy, seems like he's enjoying the fruits of his discovery.


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## redsgomarching (Mar 6, 2016)

i read this and was thinking this is pretty smart thinking.


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## OnlyMyOpinion (Sep 1, 2013)

... and I read this and thought about the rest of us all paying one way or another for his smart thinking.

I throw him into the same (garbage) bin as the recent Julien Lavallee, multimillion dollar ticket scalper.


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## Beaver101 (Nov 14, 2011)

^ +1 ... I'm surprised he was able to deposit that many coins at the bank without questions.


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## off.by.10 (Mar 16, 2014)

redsgomarching said:


> i read this and was thinking this is pretty smart thinking.


Funny, my thinking was that it was extremely dumb of the Royal Canadian Mint to sell cash at a loss. They could have sold those coins at face value + 5% and the problem would never have existed.


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## redsgomarching (Mar 6, 2016)

like i offer at the office to order food for everyone and put it on my card so i get points everyone pays me back cash and i order the smallest item like $5. so for $5 cost and food for 10-15 people at usually $15 each i can earn some great points.


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## peterk (May 16, 2010)

I just don't think the math adds up.

Say even that he somehow buys $1000/day worth of these coins, and gets 2% cash-back, both highly optimistic. 5 days/week and after a full year he's got $5000 in rewards and churned $250,000.

That sure doesn't equal *"champagne and caviar-fuelled, first-class flights to world-class resorts around the globe."*. And he had to spend a good 20-30 minutes/day I'm sure doing the actual leg work of ordering/buying/postoffce/selling. He probably should have just been working harder to get better grades in law school...


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## milhouse (Nov 16, 2016)

peterk said:


> I just don't think the math adds up.
> 
> Say even that he somehow buys $1000/day worth of these coins, and gets 2% cash-back, both highly optimistic. 5 days/week and after a full year he's got $5000 in rewards and churned $250,000.
> 
> That sure doesn't equal *"champagne and caviar-fuelled, first-class flights to world-class resorts around the globe."*. And he had to spend a good 20-30 minutes/day I'm sure doing the actual leg work of ordering/buying/postoffce/selling. He probably should have just been working harder to get better grades in law school...


IMO, you get better value with flight rewards, particularly business class and first class, than cash back and economy flights.
I'll use Aeroplan for my example because I'm more familiar with it. But there are better programs out there. However, Aeroplan has great stopover perks. 

$1000/day x 5 days a week x weeks/yr = 260k points on a card that gives you one point per dollar spent. At minimum, you can get a basic TD, CIBC, or AMEX Aeroplan card. Or you can get a higher tier card that gives you 1.25pts per dollar spent. If you don't use an Aeroplan card and instead used like a hotel card to collect hotel points, Aeroplan gave you bonus points for migrating those points over to Aeroplan. 

Sticking with the base 260k in Aeroplan points, that's enough to fly you from Canada to anywhere in the world on Star Alliance in first class. The most points is first class from Canada to Australia/New Zealand/South Pole for 220k points which typically costs $15k. For other routes on some of the nicer airlines in Star Alliance, a first class ticket can cost around $25k. 
Again, this is just using the base 1:1 collection. If he gamed this piece of it, I'm sure he likely would have taken advantage of the other collection bonuses and perks.


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## bgc_fan (Apr 5, 2009)

I suspect there was a lot of applying for new cards where they provide bonuses of 55k of miles. As well as upgrade vouchers or other such incentives. Also, in total the mint only ever manufactured $168k of coins in the life of the program.


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## bgc_fan (Apr 5, 2009)

One other thought, he could have made a profit if he resold to collectors who missed out on buying the coins. As a backup he could always sell back to the banks if he needed to pay off his credit card(s).


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## Just a Guy (Mar 27, 2012)

Personally I found it ironic that the original, offended, poster is the one who advocates programs like UBI, government jobs, and other handouts. Also the one who accuses anyone who actually makes money legitimately, say as a business owner or investor, as "crooks". Any government handout makes this scheme not even worth mentioning.


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## twa2w (Mar 5, 2016)

bgc_fan said:


> I suspect there was a lot of applying for new cards where they provide bonuses of 55k of miles. As well as upgrade vouchers or other such incentives. Also, in total the mint only ever manufactured $168k of coins in the life of the program.


Uh that was 168 million dollars worth - 5.5 million coins.


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## Mortgage u/w (Feb 6, 2014)

Isnt it the same as putting all your spendings on a rewards card and paying off the card at the end of the month??

I have used my cash-back card for years - never paid a penny in interest - but benefited in hundreds of dollars paid back to me each year.

They basically pay me to use their card.


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## My Own Advisor (Sep 24, 2012)

Just a reminder that credit card rewards programs, including cash back, are subsidized by people who can't afford to pay the money back. It's not free money.


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## nobleea (Oct 11, 2013)

My Own Advisor said:


> Just a reminder that credit card rewards programs, including cash back, are subsidized by people who can't afford to pay the money back. It's not free money.


In this case, the "subsidized by people who can't afford to pay the money back" was essentially the CAD taxpayer since this was a crown corporation. Foolish of the Mint for taking a loss on these, but there'd be no uproar if the same thing had happened to WalMart or Air Canada.


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## My Own Advisor (Sep 24, 2012)

Correct, Royal Canadian Mint.

"That's exactly what Campbell said he found at the Royal Canadian Mint. The Face Value program sold silver coins _*at the value on the actual coin*_."

"The coins aren't meant for circulation, but they are legal tender. Campbell used his credit card to buy the coins and collect the rewards points. He then deposited the coins in the bank, and used that money to pay off his credit card."


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## Mortgage u/w (Feb 6, 2014)

My Own Advisor said:


> Just a reminder that credit card rewards programs, including cash back, are subsidized by people who can't afford to pay the money back. It's not free money.


I thought the rewards are covered by the extra fees the merchants pay when those cards are swiped.


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## OnlyMyOpinion (Sep 1, 2013)

Mortgage u/w said:


> I thought the rewards are covered by the extra fees the merchants pay when those cards are swiped.


Which is then passed on to consumers, so ultimately you pay for your 'free' rewards. I'd prefer lower prices and cut out all the incentives, but of course that database of rewards clients is worth a lot to CC cos.

A bit like groups raising money selling chocolate bars, cookie dough, whatever. I'd sooner give you a tax deductable donation and cut out the merchandise. 

Interesting to note that it costs merchants $2.08 avg to process a credit card charge:

http://www.cbc.ca/news/business/bank-of-canada-cash-king-1.4405237 

Also interesting that cash is still used extensively (51% of all transactions).


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## milhouse (Nov 16, 2016)

OnlyMyOpinion said:


> Which is then passed on to consumers, so ultimately you pay for your 'free' rewards. I'd prefer lower prices and cut out all the incentives, but of course that database of rewards clients is worth a lot to CC cos.


I would generally agree. There are a few places where I enjoy shopping where they keep prices low by taking cash only (no credit card fees), don't advertise (popularity spread by word of month/social media), etc. But it's not like it is transparent enough to really know if savings would be passed onto consumers in terms of lower prices or the business just adjusts with higher or lower margins based on what they can get away with considering how competitive the marketplace is and how much demand there is for their product/service.


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## bgc_fan (Apr 5, 2009)

twa2w said:


> Uh that was 168 million dollars worth - 5.5 million coins.


Yeah, my bad. Probably too early in the morning for me. Just off by a comma.


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## Just a Guy (Mar 27, 2012)

My Own Advisor said:


> Just a reminder that credit card rewards programs, including cash back, are subsidized by people who can't afford to pay the money back. It's not free money.


Are these the same people who are probably living off my tax dollars? I guess, in a way, I'm just getting some of my money back then instead of paying all the time.


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