Well, as a "test" I bought a diamond ring using a Visa card from costco.com (roughly a $1900 purchase).

Returned it in store, got the cash, deposited in bank, paid the cc bill, got the miles.

I asked an assistant manager regarding their return policy, and she said that she "thinks" the maximum cash they return at a time is around $5,000... more then that and they would have to issue you a check back and mail it to you. But she couldnt tell me exactly... I didnt want to wait around to really find out since its not something I plan to do.

So while this "works" ... I still dont think its a great idea to rack up massive points/miles. As I had said in a prior post, if someone is in a pinch and has a deadline to meet a spend requirement, it might be ok, but returning thousands of dollars in merchandise regularly would surely raise a red flag at Costco, besides the ethical issues that I dont want to get into.

Still, its an interesting discovery.