Tuesday, December 08, 2009

Fly The Friendly Skies

You Company, sometimes when you go ahead and do something, even if you think you've though of all the potential problems and consequences, someone somewhere will come up with something so bizzare, so specialized, so far out there that you could never have conceived it, and then you end up sort of trying to run damage control and looking like you should be wearing a helmet or something. Recently, something like that happened to the poor folks at the United States government, which probably won't surprise you very much until you hear which part: the US Mint.
Yeah, the US Mint. Their job is to literally make money, as in to create it and print it and strike the coins. Sounds pretty cool, doesn't it. And their product is money, which is pretty popular the last time I checked, so I can't image you really have to advertise that and have special promotions, but that is exactly what the boys and girls at the mint decided to do. What they did was offer certain presidential and Native American $1 coins sold at face value with free shipping. What happened I don't think anyone could have expected.
Some people out there in America, whose brains are apparently wired very, very differently than mine and probably yours, saw a unique opportunity in this sale, and it wasn't to acquire distinct coins. What they did, as reported by the Wall Street Journal, was go out and obtain high limit credit cars that provide airline miles and use the hell out of them. They would buy large amounts of the $1 coins - tens of thousands at a pop - with their free delivery and they would use the credit cars, racking up tons and tons of free airline miles. Then, when the face value coins were delivered they would promptly take them down to the bank, turn them in, and use them to pay off the credit card bills. Genius! I wouldn't have thought of that in a million, billion, trillion and a half years. Nope, not ever. Maybe it's because I am not rich enough to have a credit card with that kind of limit. Maybe because I am cool enough to earn or use airline miles for anything. Probably because I didn't know anything about those coins being released.
This is a pretty inventive and sneaky scheme, and I sort of like. Partly because they got away with it in such an impressive manner. Before the officials at the Mint were able to identify and cut off some of these opportunists they were able to rack up some impressive numbers. Really just staggering. One man noted that he usually bought about $15,000 at a pop and the UPS delivery man put the coins directly into his trunk. He never even unwrapped them. Another lady stated that she earned 10,000 miles towards a vacation. An third man worked several cards to get free airfare, hotels, and other credit card programs to get a basically free two-week trip to Tahiti for him AND his wife. All they had to pay was the gas to drive down to the bank. The king of this whole fiasco, however, is an unnamed man who claimed to have bought $800,000 worth of the coins, and even posted pictures of his "loot" on a website for frequent fliers, where the word of this opportunity was very popular. The man eventually earned over two million miles with American Airlines, which got him into their platinum-elite status for life. That means early availability of upgrades and other perks - FOR LIFE. Pretty sneaky, Sis.
The program began in July 2008, and it all began to unravel in August and September of that same year when two things began to happen. First, the Mint began to notice greater frequencies of "large, repetitive orders." Second, banks began calling in and notifying the Mint that large numbers of $1 coins were being turned in still in their US Mint boxes and wrappers. Not good, banks and their employees are trained to look for that kind of stuff to prevent money laundering. Investigators at the Mint used the power of the Internet to learn the rest of the details. In short time letters went out to some of the more notable offenders asking if they were on the up and up. Those who did not respond were blocked. As for the rest? Well, the Mint is on to the scheme, but it is still going on. It is not illegal if you want to do it. It has been tempered recently as the airline industry makes it harder and harder to accumulate and use those miles. But still.
The shocking thing is that the Mint sill offers this promotion. Many of the people who are taking advantage of it are people who run things like vending machines, car washes, etc. who actually use them as intended. And that is fine. But it costs the government to run this scheme, essentially making it so each of the dollars they send out actually costs them more than $1. First of all, they have to pay the credit card fees for this whole thing, which they can't really figure out apparently because the Treasury takes care of all of that and they aren't charged directly to the Mint. That means they could find out if they want to but they don't want you to know. The bulk of the costs, however, come from the shipping. It costs the Mint about $3 to ship a standard box of 250 coins. So a $10,000 order - 40 boxes - will cost $120 for the Mint to ship. Nothing for the receiver.
The Mint is working with the credit card companies to find a solution for this problem, because no one is winning. The credit card companies are making out I suppose, and the people, but the corporate partners are not so happy. And the Mint, who just wanted to get more dollar coins into circulation because they will save the government money over paper bills is ending up going through the ringer (HAHAHAHAHAHAHAHA! Sorry, I just can't stop laughing about the irony of this whole thing) and paying out the wazoo. Epic fail, US Mint. But it made for an entertaining story. And it made a lot of people happy in hard times, so you've got that going for you, which is nice. Fly the friendly skies, indeed.

No comments: