st.exupery

If one day the entire MS scam becomes front page news (which it probably will), would banks be investigated for all the MO deposits? How about the depositors that churn hundreds of thousands of dollars in MOs? If the scam blows up, the money trail will be very easy to unravel. I'm not sure there's personal risk, though some tactics suggested here (e.g. fictional identities) might be illegal.

rsrvoir

You keep using the word scam to describe MS. I do not think it means what you think it means.

bmrisko

What scam?

Store A lets me guy a GC, Store B lets me buy a MO with GC and Bank C lets me deposit MO.

TheMacallan

Shhh...there are some things we don't talk about in public.

AlohaDaveKennedy

Whoa there! MS is no scam. Unlike bank management gaming LIBOR rates, it is perfectly legal for bank customers to legally deposit money orders bought legally using credit cards obtained legally. If fact, it is downright patriotic for customers to bring in buckets of money orders considering the banks were begging for money and demanding taxpayer bailouts just a few years back.

Would you rather the banks were just financed by money from all the bribes and kickbacks paid to government officials? And we haven't even brought up the money that flooded in to the "dead broke" Clintons from the Whitewater scamdal.

teddy25

Just like securities lending arbitrage, when investor borrow foreign securities over dividend dates so they can get the difference in tax rates between residences of different countries.

I call this game credit incentive arbitrage.

Navybones

Whether it is a scam or not depends on your personal definition of the word scam. But, there is almost zero personal risk in legal terms. Yes, there is the risk of all the loopholes and backdoors being closed. However, unless you are doing something explicitly illegal, then I dont think there is any personal risk.

Silverthunder

I would argue that one piece of personal risk is that you get black listed by banks. Although many people on here think that that lasts a few years, we can't be sure about that. What if it affects employment with said companies?

If you get black listed my a prepaid debit card company, let's say, and then you are still using their service by having the account in someone else's name, that's probably not too kosher. Although, I can't see it being worth it for them to bring civil action against you. Just wouldn't be enough money. Could be tough to prove, too.

Note that I am just talking here about the topic of risk.

Navybones

I totally meant to say there is the risk of closing cards/accounts, but you probably wouldnt lose anything out of pocket. Thanks for catching that.

commdiver

LMAO...Were you not the one who offered to vet MSers via PM? Hahaha, OMG cannot stop laughing.

seat17D

Note: The following is what has happened to me. It may or may not happen to you. For all you know it may never have happened to me. It should not be considered legal advice or anything other than data points that may or may not be truthful from some interweb idiot you've never met. I take no responsibility for any actions you might take in your attempts to prove you are a bigger idiot than I am.

It's a bit more complex.

There's the whole concept of risk. It's both the likelihood of something happening AND the impact caused should it actually happen. I'd go so far as to say you could even break impact into two components: short term and long term. And maybe even by which 3rd party is taking the actions against you.

I'll leave the "frequency" debate to others, except maybe to say that it's hard to determine ahead of time. Both in terms of whether it will happen and when it will happen.

There is a lot of unfounded speculation on impacts. Frankly, the potential impacts are both more and less than you have alluded to.

I will speak to only the impacts and actions that have been taken (or threatened) to me personally over the years

1. Account closure - always got my money back. Moderate frequency. Little to no long-term impact UNLESS my wife was the first one to find out when her card was declined in public setting

2. Blacklisted by an FI - lower frequency. Short- to medium term impact. Eventually the FI's greed heals all wounds.

3. Blacklisted by a governmental agency -- lower frequency. Variable long-term impact as governmental agencies never actually forget, they just don't take action (see below)

4. Banned from a retail establishment -- threatened, but never actually banned. Mostly just pointed discussion from a misguided manager. Low-medium frequency.

5. Banned from an online establishment -- lower frequency, generally lower impact. Generally permanent, at least for me so far.

6. Cashback forfeited or clawed back -- generally happened to me as part of a credit card shut down. so far only forfeits and not clawbacks, but they are possible

And then there are the things law enforcement can and has done
1. Executed a warrant to subpoena my banking and other financial records without my knowledge
2. Contacted my FIs to inquire as the nature of my financial relationship
3. Frozen the portion of my assets that were currently involved in the activity they were investigating
4. Visited my home -- when I was not there -- to "interview" my spouse, etc. regarding their knowledge and involvement ... and to attempt to obtain additional documentation not already obtained by the subpoenas
5. Threatened to seize my assets. Not just the ones frozen. Not just those I currently possessed. But all assets they deemed as ever having been part of the criminal activity. (Think every GC, MO, etc. you have purchased over the past 3-5 years)
6. Threatened one or more felony charges. (Consider having to explain THAT to your wife or boss.)

And that all was for something that was completely legal, once the 'splaining was done.

Of course once LEO opens a criminal investigation, it never actually closes unless they take you to court and fail. So even though I was cleared of the charges, the original case file is out there ready to be dusted off.

In the end, my biggest concern is the extent to which something will permanently impact my marriage or ability to enter into financial contracts (felony charges would be one example). Fortunately once the initial shock of LEO's investigation wore away, both my marriage and financial relationships were intact. Very thankful both she and a few key FI's stood by me.

When you MS, you are running with scissors.

Rommie2k6

Great post. Btw, how many MS volume were you doing on an annual basis? 7 figures? 8?

Kat007

MS is not scam. I personally look at it as somewhat cash withdrawal. Since nowadays not too many people do a traditional cash withdrawal, banks lose some potential profit here. With MS, the opportunity to make some profit for banks came alive.

It`s not like you are stealing money or do something illegal with it; you are purchasing travel perks (and keeping travel industry afloat) and splitting the cost with banks. We all spend money on MS in some way-some people more, some people less, but we do.

Every store (especially their managers) is happy to sell gift cards, too, as they have to meet a quota.

I see it as win-win situation for all.

ZzzzX

There is a real risk if you engage in fictional creations. "Modified" SS numbers come to mind. Altered birth dates come to mind. If you are dealing with a FI that requires information to verify identities because of the Patriot Act you could have problems. When, where, how? Who knows. But it's a real risk.

smoothmunkey