Originally Posted by mapsmith
Two words. "Money Laundering". What you are proposing is against the law. Merchants are not allowed to process refunds on Credit Cards to a different Credit Card or to give the Refund in Cash or even a check. If you can find a Merchant that will allow it, be prepared for the consequences.
(Of course if you can find a Lawyer to defend you that takes Credit Cards and/or Gives Miles???)
Coming from your American view point this is probably correct. However, the OP never posted where they live or where the local store is.
So in your city or maybe even in the US it could be considered "money laundering", however, each merchant can give the refund in any form they want. It is the merchant that has come up with the policy to only refund it to the original form of payment, this reduces the losses to the merchant. There is no goverment interference dictating how a merchant can process refunds. I have paid with a CC in several locations and when there was a guarantee or an overcharge had the difference refunded in Cash. I think it would be a stretch to say that the USPS or a major grocery store chain was laundering money because I made a purchase with a CC and got a refund in cash.
Are there costs to others, most definitly. The store has to pay the CC fee, the CC has to buy the miles from the airline. But is it illegal or fraudelent, NO! Immoral, could be . Money Laundering, definitly not! A very difficult and time consuming way to earn miles that could have a "catch" to it, most definitly.