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rxgeek, unless you saw the cashier call the CC, s/he is likely bluffing; did you even get to the point to insert your card for them to say it was denied? I believe the CC when they said there was no sign the card was inserted at the POS terminal.
if another offer comes, try it with a different cashier and if you get the same spiel, it is possibly coming from store management so you might as well skip that store for future OD/OM promos.