December 09, 2009
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Mint Coin Offer Goes Sour, Pt.1
The ways of unethical credit cardholders.An offer with good intentions turned sour as a group of unethical Americans found a way to scam credit card companies out of thousands of free reward miles. The Wall Street Journal released a story about an individual who schemed to purchase $800,000 worth of coins from the U.S. Mint with his credit card. The man then deposited the coins in his bank account and then used it pay back his credit card balances thereby earning hundreds of thousands of reward miles. The man bragged about the scheme and detailed how he used several card accounts and on the internet which sparked a chain reaction of individuals pulling off the same scheme.
The plot started back in June 2008. In an attempt to circulate new dollar coins into the general population, the U.S. Mint launched a direct ship program to individuals. The Mint already had a program in place where they were shipping coins into banks for distribution. It was important to the Mint to circulate coins because they have a longer life than paper currency. The gentleman who bragged about his conquest was searching for ways to manipulate usage of his credit card to earn extra miles for free flights. Under the direct shipment program consumers could use their credit card to purchase a maximum of 500 dollar coins for each of five different presidential coins which included Washington, John Adams, Jefferson, Madison and Jackson. The direct shipment offer also included a sixth coin of Sacagawea. Sacagawea was the Shoshone woman who helped the Lewis and Clark find their way on the expedition.
The problem existed whereas no limit was set for the Shoshone woman. Therefore, the deceptive individual purchased a large number of these coins. Unfortunately, the Mint did not anticipate that credit card holders would ever take advantage of the program with deceptive practices for personal gain. To make matters worse, the Mint shipped the coins at no charge.