Writing in the USA Today, “consumer advocate” Christopher Elliott has this lovely little passage in an article about travel hacking:
Another well-known hack involves signing up for a credit card that allows you to collect frequent-flier miles and then buying items such as gift cards only for the bonus points, known as “manufactured spending.” Then you convert the the item back into cash and pocket the points.
Again, it’s totally legal — and totally wrong. The cards are meant to reward real spending. Exploiting these payment systems only forces the companies offering them to tighten their rules, which can affect all cardholders.
This is a rather silly thing to say for somebody whose byline identifies him as a “consumer advocate”. Apparently the man on the street is first supposed to divine the pure, true, and real meaning behind credit card rewards programs, and then to leave money on the table when actions are opposed to that meaning.
Are banks somehow coerced by evil consumers into handing over points and miles? No. Generous credit card bonuses are a gamble on the part of banks, the gamble being that interest income and fees will be greater then interest expense and bonuses. Banks are free to convey “meaning” to consumers by reducing or capping the bonuses at any time.
And note that banks like to use the word “unlimited” in their marketing copy (see here and here). In marketing promotions, you want to maximize the perceived value (hence “unlimited”) while minimizing the actual cost. If they don’t want people getting unlimited rewards, then they shouldn’t market unlimited rewards.
(H/T: TBB)
I was having a very similar conversation yesterday with some associates. I feel like Mr. Elliot’s article (like many of his articles) sets a double standard. “It’s not okay for hobbyists to utilize the card rewards for their gains, but it’s perfectly acceptable for credit card providers to set all the rules and you must abide by all of them to the spirit in which they are intended.”
Makes perfect sense.
Hes right
Ms is wrong.
And as long as he and his readers feel that way, it means less people will do it and so its better for us. Lets not debate the matter further. Thatll give it too much exposure
Thank you
The real heroes here are people who carry balances and pay interest on rewards cards debt, because they’re doing exactly what the bank wants them to do. That’s a logical conclusion, no?
Note: I don’t actually dislike Chris Elliott as much as I used to, given my encounters this summer with a number of people who are genuinely stupid and unable to follow or even read instructions. They need a mensch like him.
I agree, there are a lot of people out there who just can’t handle this stuff. Elliott’s talking to a different audience.
That dude has proved himself to be a clown time and time again. He caters to masses of sheep who see the banks/corporations as too big to fail, while most of us in this circle see the banks as to big to be efficient and exploit those inefficiencies.
He wrongly assumes that if MS were to go away the banks would funnel the additional profits back to the “good customers” via rewards and service. That is a Utopian hallucination a best and Elliot is lucky he is largely freelance because if I were his employer he would be headed to the bathroom for a supervised piss-test.
Screw those airlines, hotels and car rentals following horrible double/triple/quadruple standards when it comes to setting cost for travel, stay and rental. On top of it banks encourage MS by asking people to spend horrible amounts like 10k in 3 months etc. I dont care what these corporates think or what these in between people like Chris Elliott dicates how i need to spend on my travel needs. As long as the system is there to be used, i will be using it.
The T&Cs for the credit card issuers often exclude cash equivalents from earning points/miles. I have no doubt that AMEX, Chase and other big banks with their sophisticated purchase monitoring could enforce those T&Cs if they chose to do so. My take is that they chose to let it continue, at least until it is no longer profitable for them. I think this is similar to credit card sign out bonuses unless and until they create different incentives for their CC “sales” departments. I am not sure why they seem to encourage churning if it is really less expensive to keep a customer than obtain a new one. You might think the retention bonuses would be better for us people who are putting a lot of spend on cards….
This guy obviously doesn’t subscribe to capitalism. I generally don’t take advantage of the mistake fares as those are true mistakes. The credit card companies offers are a whole different thing. The abusers are priced in and if they want to put a stop to them they would. They are making a conscious decision to not shut them down or close the loop holes.
Oh, and of course you are one of the elite who can handle it? Give me a break.
This Elliot article was the most trivial, “pax both their houses” article I’ve read in a while.
Here’s the article’s summary quote: “Yet even if airlines, banks, and hotels don’t play fair, it’s no excuse to sink to their level.”
Really? We are not talking about winning independence for a colonial state or basic justice for an entire racial group here. We are talking about buying and selling. Period. And as individual players we are on our best days Davids against the corporate goliaths, who really do hold all the cards. We are talking about the banks here–yeah, those same greedy sob’s that pumped subprime refinances so far so fast that it sunk the entire economy.
My motto: screw em anyway you can.
I agree. I would also add that the big banks, who are the lynchpins of the modern travel industry keiretsus, are the most evil commercial institutions on the face of the planet.
Most people reading this are the ones who can handle this, yes. If more people had the aptitude, the hobby would have burned itself out a long time ago.
There is a particular mindset.
But most people dont have it. MS is relatively east (apart from learning the “what if’s” and being a detail-oriented person). But there are some people for whom it is just not doable.
Nothing to do with we or they being “elite” or anything like that… It’s just that not everyone can. And people have their own reasons, of which these may be a few:
Their own senses of ethical or moral boundaries
Finances
Fear
Social ineptitude
Location
Inability to stay organized with numbers (I think at the very least, one needs to know how to use Excel or at least keep some sort of written ledger)
***
MS often requires stealth modes of existence and underworldly practices. I have to tell clerks or curious neighbors Im a travel consultant or big ticket Ebay user or a currency trader. If my kiddos are with me during these conversations I have to essentially lie or bend the truth.
One has to be ok with this.
In MS we are like Andy Dufrense, from Shawshank Redemption: Andy crawled to freedom through five hundred yards of shit-smelling foulness I can’t even imagine- or maybe I just don’t want to. Five hundred yards… that’s the length of five football fields; just shy of half a mile.
We work all day all week all month all year crawling through smelly walmarts dealing with clerks accusing us of fraud and ccs locking us up to have to call in, constantly dodging bullets in trenches, but when we get done, we can take those trips and vacations!
Some people have no ability to handle this methodology and many might be avid readers of CEs article.
I say let em. Lets leave our egos at home and not try to defend MS to those people! Lets just nod and agree with them when they say MS is wrong just as we have to nod and agree with clerks and others in our daily grind. Whatever it takes to get the job done.
We shouldn’t even be talking about it all right now in here.
“Genuinely stupid”. Love that. 🙂
Well, the guy actually tries to help people, and that sets him aside from other talking heads. But you’re right. He somehow believes that if players stop gaming the system, somehow, the system will become more fair to an average consumer. This is pure utopia. The system will squeeze every buck it can, and then come back for more. That’s how it works. We are a drop in a bucket and don’t matter much in the big scheme of things.
It’s been a rough summer.
I absolutely agree that they could shut us down if they wanted to. But the idea that there is free money to be had draws people in. Most people must end up being profitable to the banks. It’s like loss leaders at the supermarket. If they establish too many restrictions they discourage profitable customers from coming around.