Squirrelers is a clever guy. Instead of settling for a free lunch at a local lunch joint every seven visits, he's cut that down in half. With the “buy six, get the seventh free” deal, the shop gives a starter stamp when they hand out the card. So, practically, it's actually buy five, get the sixth free. Now what he's found out is that the employees haven't recognized him yet, and every time he goes in to buy lunch, he fails to pull out his loyalty card, and they offer him another one. With another extra stamp. And when he's amassed seven stamps (spread over multiple cards), they take them and he gets his freebie.
It's clever. I can't say that it's fraudulent. It's not as if he bought a stamp and is stamping the cards himself or anything like that. They hand him the cards with the extra stamp, and they let him cash in his free lunch by turning in multiple incomplete cards. He's playing by their rules. They just haven't caught on yet.
They just haven't caught on … yet
That's the rub. They will catch on eventually. Someone at the shop will see what's happening, and close the little loophole. They may start demanding that the card be completely full: no multiple cards. They may just get rid of the free stamp, so there's no advantage to collecting more than one at a time. Or something else.
He, and everyone else, won't be able to do that anymore.
But you know what? That's all right! Kudos to you if you find a loophole and enjoy a little reward for it. This is the free market in action, and it's the best way in the world to wring out inefficiencies, because ultimately society as a whole benefits when that happens. Businesses should be free to offer incentives to attract more business, and consumers should be free to do their darndest to extract as much service from businesses as they can (without being illegal, immoral, or unethical).
Inefficiencies are wrung out all the time
Here are just a few that come to mind:
- Bounties for switching long distance companies. This was in the early- to mid-1990s if I recall correctly. There was fierce competition from long distance companies to steal customers from competitors. The people who played this game would switch early, and switch often. Company A would pay someone $50 to defect from Company B. As soon as the check cleared the bank, they'd be on the phone with Company C, ready to sign up if the price was right. Invariably the price was right, and as soon as that check cleared the bank, they'd call up Company A again! Eventually the phone companies caught on, and they started attaching strings: the bounty would come as a credit on their next six phone bills.
- Free dial-up Internet. Others played the game with AOL and other ISPs far better than I did. They'd call up to cancel after paying for a while. The representative would offer a free month. Awesome. Thirty days later, they'd call up to cancel again, and get someone different on the line, who would — you guessed it! — offer them a free month just for staying on. Eventually, they saw this happening, and kept track, I guess.
- Free airline five-star treatment, courtesy of the Mint. Buy a whole boatload of dollar coins from the Mint, using your credit card, and get them delivered to your door, for free. Make sure to use a card that gives you airline miles. When the money arrives, deposit it in the bank, use it to pay off the credit card bill in full, and keep the airline miles (or cash back, or whatever). Well, not only did the Mint not appreciate this (since the whole goal of this program was to get the coins in circulation), but some credit card companies started treating these kinds of transactions as cash advances, so interest started accruing immediately.
- Withdrawing large amounts of coinage, searching them for gems, and redepositing them in the same bank. This is more for a coin treasure hunter (of which I know a few). Withdraw $500 worth of half dollars. Go through all of them searching for ones that are worth more than face value. After picking through all of them, return the $499.50 worth that are worth exactly 50 cents apiece back to the same bank. If you were a teller at that bank, how quickly would you get sick of that? One of my treasure-hunting friends was ticked off when they started charging to withdraw coins like that!
In any case, here's my story and I'm sticking to it. Loopholes are made to be found and exploited. Just realize that they're not forever, and that you may the cause of your favorite loophole's demise. 🙂
how is that not fraudulent? they ask do you have a card yet, he lies and says he does not so that he gets a new card. misrepresenting yourself to game the system is fraudulent.
I agree with you 100%!
I got the United Credit card with the fee waived and 30,000 bonus points – 3 times. With these miles and the $ I spent – I was able to fly to Japan in First Class on Luftansa. I signed up for this card a 4th time and they did NOT give me the bonus miles – but I still got a $50 credit towards my first bill.
I just signed up for the continental credit card (also by Chase – Same as United) I got the 30,000 mile bonus – soon I will merge my continental and United accounts!
Wow–that coin one is interesting. I would never have thought to do that in a million years. Did he score any good ones?
Interesting post, MBH! I did hear about the mint scheme, where people got lots of airline miles for free (except for time an effort in following through on the scheme). Really, it was a loophole and consequently it was exploted. I don’t blame the Mint for having issues with it, but I also don’t blame people for following through.
I can see how some of these tactics can be ethical but not 100% pure at all. Makes sense how some folks may have minor issues and reservations with such behaviors. In the case of my example, I actually asked the business directly if they’d honor my multiple cards, and they said yes, so I feel like it’s a fair business transaction!
I am thinking about the Extreme Couponers and how their crazy actions are causing a crackdown on the use of coupons.
Nice tips, I am sure to be on the look out for the free lunch thing. That is a great idea and of course you are not breaking the law !
I like the one about the coins, but it’s not a good use of our time. My oldest once did some time going through our “silver” change jar, and sure enough found a Roosevelt silver dime. There’s not many out there, but they’re there.
There was a good Social Security loophole that got shut down in the last year or so. You could start drawing at 62. Then if you paid it all back at full retirement age (after earning interest all those years), get the larger monthly amount.
We were planning on doing this with my husband next year until the loophole got closed.
My favorite loophole experience was back in the 80s. We went to McDonald’s, and they were running a promotion where they would give you a postcard to send to a friend. The friend would then get a free Big Mac. I pointed out that anyone could be considered a friend, so why not send it to our own house? So my mom sent mailed it to our house, and we took it in and redeemed our free Big Mac — which came with a postcard that we could mail to a friend. We ended up with a LOT of Big Macs during that promotion for the cost of a postcard stamp.
As long as it doesn’t get out of hand, it can definitely work to ones advantage. The problem these days is that in the days of social media, Slickdeals, and everything else, the information about these loopholes goes viral, and then the company is forced to shut it down, leaving those who might not have ‘abused’ it out in the cold.
The supermarket giant (at least here in the UK) Tesco kicked off a ridiculous half-baked promotion earlier on this year. It promised that if you found the same product for less at their major competitor ASDA, they’d refund you double the difference. Cue an explosion of social media activity and online forum debates where consumers shared loop holes, deals and ways of exploiting the ill-conceived promotion (my personal favourite was a bottle of wine for £11 at Tesco and £5 at ASDA. Tesco reimbursed consumers £12, effectively paying them £1 to drink the wine!!) Tesco soon hastily scaled back the promotion, changing the reimbursement cap from £100 to £20, suffering some major PR embarrassment in the process.
@Harri: Interesting that they actually let the refund go negative (paying someone to walk out with their merchandise). Pretty amazing, actually.
@Money Beagle: Exactly: free market in action! Love it!
@Jackie: I guess the computers weren’t exactly that powerful back then, so it would be quite difficult to track.
@Kay: Now I didn’t know that! I had heard about the loophole a couple of years ago but had no idea that it had been closed.
@101: Yes, they are hard to find.
@Melissa: Likely the people caught in that mess were breaking the law: fraudulent use.
@Squirrelers: Thanks! Glad you liked it. Yeah, if the business lets you do it, and you’re not lying, go for it.
@Amanda: He’s been doing it a long time, so yes. Can’t remember any specific finds though.
@Tom: No, he’s not lying. You’re putting words in our mouths. Nowhere in either post does it say that the clerk asked him if he had a card yet. That’s quite different than having the clerk ask if he wanted one, which is what he said.
I think that it’s fine to find and use a loophole, but it is wrong to be deceptive about what you are doing. If you have to use deception, that means that you already know that you are doing something wrong.
I remember working at a convenience store, and having customers get upset that they couldn’t pay for money orders with a credit card. That restriction was put into place to stop people from buying a money order to get rewards and then paying the bill with the money order (similar to the coins from the Mint).
No, there’s no lying! If they don’t ask, it’s not lying. You don’t have to voluntarily offer up that you have a card if they don’t ever ask. Perhaps you misunderstood….
Above comment was a response to Tom…
@Jackie –
What a tremendous deal! For the savvy bargain hunter, that is:) Clearly, people have been good about finding loopholes for many years.
Not that constant Big Macs are good for one’s health or long-term finances, but it’s the spirit that counts and that’s a great story! Must have been fun.
A lot of credit unions, and some banks will take, say, $500 of half dollars back through a coin counting machine in the lobby. If you order coin in boxes at one bank, and then return the loose coin at a different bank, then there is not a problem.
Why is there a problem in the first place? Armored car companies, such as Brinks, Loomis, Garda, etc charge to sort, roll, box, and deliver the coin to the bank or credit union. They also charge to pickup loose coin, etc that the bank or credit union is sending back in for safety or space issues.
This is a cost to the bank or credit union that a lot of coin roll hunters dont know about, or they just want the bank to absorb the cost for them.
If everyone did that, the bank would be over-run with too many bags to return. An armored car service only gives 5 minutes (for example) to come in and leave the bank. If they have to haul hand truck loads of loose coin over and over this time expires and the bank gets an additional surcharge for the extra time.
Now you know why tellers start to get “testy”, especially if you order the coin and return it at the exact same branch.