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Flyer Who Glitched $160,000 in American Tickets Pleads Guilty

Flyer Who Glitched $160,000 in American Tickets Pleads Guilty
Joe Cortez

One  flyer from the St. Louis area who found a way to travel for free has plead guilty to one count of wire fraud. William Joseph “Billy” Schwarze admitted in court to using a loophole in American Airlines’ computer system to take over $160,000 in free travel.

A flyer from the St. Louis area is facing federal probation and restitution, after pleading guilty to one count of wire fraud against. The St. Louis Post-Dispatch reports 27-year-old William Joseph “Billy” Schwarze entered his plea in court, admitting that he used a glitch with gift cards to travel for free.

Gift Card Scam Involved Buying, Then Refunding Tickets

According to attorneys working on the case, Schwarze would buy American Airlines gift cards between January 2016 and October 2018 using his personal credit cards, then purchase airfare with the airline. Either immediately before or shortly after a flight, he would then apply for a refund, which was supposed to go to the non-refundable gift cards. However, the computer system allowed him to receive a refund directly to his credit card, offsetting the purchase.

Schwarze advertised his services as if he were a travel agent, telling people that he would travel over 200,000 air miles per year and held elite status with hotels and airlines. He would then book flights for others, charging a combined total of $20,000 for his services. But instead of legitimately paying for flights, he would use the computer glitch to book flights and get refunds, allowing him to directly pocket the money.

Since discovering the glitch, American says they have updated their systems to prevent the same thing happening again. Prosecutors say Schwarze stole $160,000 from the airline.

Under the plea agreement, Schwarze will be ordered to repay around $180,000 in restitution to his victims. Instead of jail time, attorneys for both sides say they will recommend probation instead.

Gift Card Scam Latest Airline-Related Crime Prosecuted

The guilty plea is the latest victory for U.S. district attorneys fighting against airline fraud. Earlier in September 2020, a former airline employee plead guilty to conspiracy to commit wire fraud, after lawyers say he would obtain fake airline IDs for people to fly for free using non-revenue space.

View Comments (2)

2 Comments

  1. AlwaysFlyStar

    September 12, 2020 at 7:54 am

    I have read this a few times over the past few days but I really don’t understand it. So he would buy a gift card with his credit cards. Then he would book a flight with it. And then cancel the flight and take a refund. However, instead of a refund onto the gift cards he bought, the computer glitch refunded the credit card used to pay for the gift cards? I don’t really understand where the fraud is because it seems very circular. Is the glitch that the flights were not actually cancelled and he took the flights AND the refund? That would make sense, but the article says that the glitch refunded his money to his credit card rather than gift card. If the glitch did not cancel the flights, surely the article would have said that?

  2. J S

    September 23, 2020 at 1:55 pm

    I went and read the actual plea agreement. Here is what he actually did (since the article didn’t make sense to me either):
    1) He bought a ton of gift cards (690 in 2018 alone for between $50 and $150 each).
    2) He used the gift cards to purchase airline tickets.
    3) He then went to the refund site and, in the space for a ticket number, he entered the MSR for the gift card. This resulted in a refund of the gift card purchase (not the ticket purchase) back to his credit card. The airline ticket remained intact.
    4) He flew on the airline ticket (or sold that ticket to someone else).

    Thus, he ended up with a flight *and* a refund of the gift card.

    It seems that the problem in the AA system was two-fold: a) allowing a refund of a supposedly non-refundable gift card and b) allowing a refund of a gift card that had already been used. My guess is that there is a system that tracks whether the gift card has been used (so that you cannot use a gift card repeatedly), but since the card is supposed to be non-refundable, that system did not link back to the refund site.

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