I’m against sharing new Manufactured Spend deals on blogs. Not because I want to keep everything for myself, but because there is no reader quality control, and that means people are more likely to ruin the next big thing. Case in point, I recently engaged a friend over email regarding meeting a $5000 minimum spend and recommended mall gift cards. He acquired them with ease, but hit a roadblock at liquidation time and instead of walking away, he called over the manager to over-ride the cashier who refused to issue money orders to gift cards.
Even when you directly help someone, they need to understand the foundations of how to do things right. So since I don’t want to exclude, but I also don’t want to ruin things, I thought to share how to assess a new Manufactured Spend opportunity. You will note that many times when you see a new opportunity on a blog it is to sell something, they offer you a deal, and there is the expectation of something in return, either higher readership for later conversion, or immediate conversion into credit card acquisition. With that in mind, the blogger may not care about your ability to review the deal, or any impact or fallout of what happens to you.
Everything has risk. Some have multiple risks.
- Loss Risk – it is possible that you could charge up a gift card with $500 and lose it. This could happen to several cards, or all of them. Some malls will print a receipt that has the card details on it, so you could potentially retrieve the funds in the case of loss. However, that assumes that you are aware of the loss.
- Fraud Risk – it is possible that you could charge up a gift card with $500 and someone has copied the card number and details. In order to set the pin and use the card a person would only need to look at the front and back of the card, which is not protected by a security seal in some cases. Other cases have been reported where people have scratched off the back of gift cards to reveal security codes and then recover them, when you charge the card they drain it.
- Theft Risk – carrying gift cards with you increases the amount of cash (equivalents) you are walking around with, this will increase the impact of a theft/mugging. It could also make you appear more of a target if you are uncomfortable carrying such sums and your body language changes accordingly.
- Liquidation Risk – you may read that you can buy from X and liquidate in Y. But what happens when, like my friend, Y says no? You might have found a bad cashier or store, or you might also have walked into a system-wide software update or policy change.
- Financial Review Risk – if you are purchasing using certain cards, you may receive financial reviews (Amex) or fraud department inquiries from other banks like Chase, or Citi.
- Shutdown Risk – it is possible for both gift card issuers and liquidation methods may shut you down for unusual activity.
The above risks are just some of the risks you should consider. The biggest impact that you will face should one of these risks occur is that your money can be tied up for some time until you can resolve it. The term Float is used frequently, and when assessing a new opportunity you need to be certain that the scale of it fits within your float.
Your float number
The float number should be the amount of money you can afford to lose for a considerable amount of time. I would suggest that the float timeline you should use should be the greater of the amount of time to liquidate traditionally, or 90 days. For example, if you buy $5,000 of gift cards, how long would it take you to liquidate them if all avenues closed? If you used them for your groceries etc and drained them the old fashioned way. Remember that you will be receiving a bill from your credit card company within 1-2 months of your purchases, and they do not care if your funds are locked up.
When you see a new opportunity from a blog, think about all the possible risk aspects that may apply, and even if you find that you are comfortable with the probability of their occurrence, make sure that you can float the funds in a doomsday situation. Remember that your float number is variable. If you are taking on more risk through other areas of your financial life, then you should consider your exposure to float, and adjust accordingly.
Can you bend the truth?
If you fall victim to the risks associated here, and need to start resolving them to return your money you cannot call in to the relevant location and say “I did this just to earn credit card points’. This is the real truth, but there is no Manufactured Spend opportunity available that was created in order for you to earn credit card points. If you are buying gift cards from a mall to manufacture spend you aren’t doing it for any other reason than to earn credit card points. But if you tell everybody that you meet in the resolution process that you are innocent and just trying to earn credit card points you will be alerting them to the flaw in the system, and you will be contributing to the closure of the opportunity.
The way that I handle this ethical dilemma is to not venture the full truth. I talk about other things, if I am confronted and challenged I may admit that I am doing this for points, but I wouldn’t do so until I feel I have exhausted every other avenue to avoid answering that question directly. Ultimately it is irrelevant to the resolution as to why you did what you did, so focus on the facts. You broke no rules nor laws, and you want your money back.
If you aren’t comfortable with doing this, don’t manufacture spend.
Part 2 – Assessing Return -coming soon.
For conversations on live Manufactured Spend opportunities, please come over to the Forum, where we discuss new ideas and how to implement them safely, for both the individual and the opportunity. Manufactured Spend is held in a private area which is by invitation only, please message me via the forum regarding entry.