The Ethics Of Reward Card Deals

I was a philosophy minor in college, so therefore I feel I have the right to lecture my readers on the ethics of the deal.   I am in the business of being an expert on reward credit cards and their related loyalty programs.   I also consider myself an honest and ethical person.

After much consideration, I have concluded that there are four kinds of deals out there, and I will list them in order of their ethical value:

Win Win Deals

These are deals where all parties come out ahead, and there are no moral or ethical problems whatsoever.   I would definitely put the US Airways/TrackItBack deal in that category.   Any doubt that this was a great deal for everyone involved vanished when the founder of TrackItBack, Jason Wagner, joined FlyerTalk and expressed his opinion that this promotion has been an “overwhelming success” for his company.    Finally, I just spoke with some non-profits who will be accepting much of my TrackItBack purchase, and they are as thrilled to receive the donation as I am to get the tax write off.

Many promotions involve loss leaders that are designed to acquire new customer relationships, such as credit card sign up bonuses.    It is not your fault if you choose not move your business to the credit card that gave you a bonus.   These days, many credit card sign up bonuses have a minimum spending requirement, assuring the bank that they will receive at least some merchant fees in return for the miles or points given.    Remember, these companies these miles and points by the tens of millions for a fraction of what you might think, if they don’t just issue the points themselves at no cost at all.

I will gladly share all of these deals with you as I find them.

Taking Advantage Of Loopholes

These are deals that probably were not anticipated by the people who created the promotion, but don’t violate any documented company rule or law.    A good example would be the people who are bought travelers checks or coins with their credit cards to earn points.    Clearly, these products were not offered for that purpose, however customers were not technically breaking any rule, and were certainly not breaking the law.    Ethically speaking, I have no problem with these deals.    When the loopholes favor the merchants or the banks, the customer is usually hung out to dry because they didn’t read the fine print.   I have no problem holding banks and merchants to the same standard.

When I find these, I have to balance my desire to share them with the natural tendency to keep them in the dark so they are not closed.    Another factor is the risk to you the reader.   One of the last things that I would ever do would be to advocate any behavior that would be financially risky if not carefully executed, as many of these loopholes are.

Deals That Are Against The Rules

Ultimately, the US Mint notified customers that it was not their intention to offer One Dollar coins to customers who were going to deposit them in the bank, rather than put them in circulation.   When that happened, this deal went from being a loophole to being against the rules.   One could argue whether or not depositing coins in the bank puts them in circulation, as several bank tellers have told people that they are glad to receive them to meet customer demand.

This is where things get really murky from an ethical standpoint.   For example, most airlines consider it against the rules to purchase a round trip ticket and not take the return flight.   People have been known to do this when the round trip is cheaper than the one way flight.   Most airlines (not Southwest) feel that they can dictate your behavior to such an extent that they will actually claim that you are breaking their rules by not using their product!       I would not loose any sleep over breaking such an absurd rule, yet other rules are not as clear.    Take, for example, the US Mint again.   They now say that it is against the spirit of the program to deposit coins in the bank.   On the other hand, money is money and why wouldn’t I deposit any extra in the bank?

Everyone has to make their own judgment call here, but I will not advocate deals that break the rules.

“Deals” That Are Against The Law

This is pretty simple and there is no “judgment call”.  Under no circumstances will I participate in or even mention any deal that breaks any law.     In fact, I will always err strongly on the side of caution against any deal that comes anywhere close to breaking a law.     There are all sorts of ways to defraud banks using credit cards if you think about it.   It is also one of the stupidest crimes you could perpetrate, as you leave a pretty broad electronic trail leading right back to you and your family.

We live in a society of laws and we are all bound to obey them, even the ones we disagree with.   If that is not good enough for you, think of it this way:  No amount of frequent flier miles is worth a criminal record, fines, or jail time.