Originally Posted by skAAtinsteph
There are numerous other threads on this topic and I think the general consensus is that it is illegal.
It would certainly raise red flags from a tax perspective. Essentially, the IRS would want to know why thousands of dollars were earned (and subsequently spent) by a "business" -- legitimate or otherwise -- and whether those expenses were, indeed, legitimate business expenses.
The scheme is also a violation of Google's terms, in that it prohibits someone from using Checkout either to provide cash advances (which is what is being done here, in essence) or to use it without actually selling a product or merchandise.
The promotion is enough for me to sign up for my own business purposes. There's no way I'd use it in the method suggested, though, given the risks involved.
Mike