My MasterCard card was lost/stolen, I'm not sure. As soon as I figured it out (bus ride home) I maxed it out on a tuition payment with my internet phone and canceled it a bit later.
Had to cancel an airline ticket or something from Air Canada and Air France, I had to send a letter in writing with other credit card number, I gave them an AMEX number to which I got the credit.

I agree!

I bought gas last week from a station which insisted that since I wanted to use a CC, I had to pre-pay -- as in, they had to run the transaction, have me sign the receipt, and everything, before I could pump gas. Uh, ok, but I want to 'fill-er-up', so I told them I didn't know how much it would be. The clerk said that I could just pre-pay as much as I want, and they would refund the difference in cash.

My eyes lit up with $$$!

I pre-paid $40, bought $33.50 of gas (filled-up) and walked out with $6.50 in cash. I wonder if I could have pre-paid $50. Or $100?

Now this MUST violate the merchant agreement!

It doesn't merely violate the dealer agreement, it violates common sense! That dealer is paying a percentage to the credit card company based upon what he rings into the charge machine, not the gas pumped.

I'm trying to figure out if that dealer might be doing something that makes it easier for them to scam people (by stealing credit card numbers). Not knowing their setup, I don't know.

Even when using debit cards, there's a separate merchant agreement that must be signed if you want to give cash back on a debit transaction.

Since the merchant pays a couple percent fee, the bank shouldn't care. The merchant is certainly violating all rules of common sense, returning 100% of the cash.

The bank cares big-time because they have very substantial charges for "cash advances" and have no intention of allowing merchants to do so for free, even if at their own (the merchant's) expense. The cash advance fees are typically a 3% straight-up service fee (or minimum $10) plus interest. Merchant fees don't generate that kind of money.

I honestly doubt it. The clerk claimed that ownership instituted the policy because they had some people give a credit card at the counter, pump, and drive off. When they went to charge the credit card, it was frozen. So now they want to have it pre-paid. She even agreed it was a bizarre policy.

It is stupid of ownership to this, as they are paying fees on revenue they didn't get. But there are plenty of stupid people in the world, and I'm sure plenty own gas stations.

it does not necessarily violate common sense, if the station views the time and effort to process refunds on credit card transactions is not worth recouping the merchant fee (if it can be recouped at all).

but don't get too excited - they're not going to let you clean out their till.

Even if an account is closed, it's usually still possible to process credits (refunds) to it, even if new charges aren't possible.

To sum up, all card merchant agreements prohibit what the OP is suggesting. There are some merchants that goof up and do it anyway, but they're in the minority.

The other issue is that large amounts of refunds posted to a card are a fraud flag, especially when there haven't been corresponding purchases. The card company will shut you down pretty quickly.

The problem for a merchant with the buy one on/refund on another is that the card used to purchase is likely a premium card (hence the miles) and the card used to refund is a basic card. So the merchant has to pay something like 3.5% on the purchase, and then gets back at the most 2% on the return. Now, many merchant accounts don't even refund fees on returns, so it could be a straight 3.5% loss for the merchant.

It's worse than you think. Unless you void a transaction, which can only be done on the same day it was made, the merchant is on the hook for the transaction fees & percentage, and does not recoup any of that on a refund. The rationale is that it's a processing fee, and the charge card company is, after all, processing, even when it's later returned. As merchants, we are supposed to feel lucky they don't charge us a fee on the return as well. :mad:

And, to further skew this nonsense in the banks' favor, they take away the rewards from the customer on the return. So the miles/cashback/whatever that they "awarded" to the customer in exchange for the 3.5% charge to us merchants get taken away from the customer. So the bank gets the 3.5% AND they don't have to pay a premium to the charger. And I don't see Obama stepping in on this one.

OK, aside from the issue of whether it's unethical or fraudulent, I still don't see how this would result in earning more miles.

Let's say this month you spend $100,000 and return $50,000. If you do it all on one card, you'll get a net of 50,000 miles (assuming 1 mile per $).

If you spend the $100,000 on the mile-earning card, and then return the $50,000 on a non-mile-earning card, it appears as though you'd earn 100,000 miles. But here's the catch - the $50,000 refund on the other card won't be given to you in cash, right? As a result, that card issuer would only offset that $50,000 against past (or perhaps future) purchases...meaning that you'd end up having to spend a net $50,000 on that card too.

End result: You'd have spent $150,000, and then returned $50,000, and received a net of 100,000 miles - the same total you'd have if you would have just made all the purchases and returns on the same card.

Am I missing something here? Are there card issuers that would give you the $50,000 in cash if you don't make any purchases? Sorry if I'm missing something obvious, but I just don't see that happening....

I guess you are right, but there are special circumstances.

Example:
I do have two different Amex cards, one earns MR (one per euro), the other miles on an airline (two per euro). The MR-earning-card I rarely use, but there are co-cards for family which earns MR for me.

I booked a hotel on the internet using the miles-earning-card. I don't know the exact amount, so let's say it was 100 euro, so I got 200 miles.
Then when I checked in, they made a mistake taking another 100 euro for this stay from the card on file, so another 200 miles.
They discoverd their mistake, so they asked for my card to return the 100 euro. I gave them my MR-earning-card, so 100 points less.

In my case I almost never use the MR-earning-card but the co-cards are used frequently, so I earned 200 miles giving away 100 points.

BTW, in my case it wasn't intentional, but my other card was in my room at that time, while I was carrying the card which I used for the credit.

I've had large credits on rarely-used cards from time to time, and the cc bank just cuts me a check to clear off the negative balance.