Definition of Agency Problem:

Source.

As a client of a credit card company, you're expected, on average, to act in a way that is beneficial to the company's financial interests though not with a sense of free will in the process. For example, you may rack up huge charges and maybe even receive a sign-in bonus. But the huge interest charges and an occasional late fee will quickly neutralize the sign-in bonus, resulting in profits to the bank in the average case.

An MSer doesn't play by these "unwritten" rules and charges the hell out of his cards, racks up hefty rewards, and "recycles" the money charged to pay back the loan, thereby repeating the process over and over again..

Principal-Agent Problem: Agent games the system and acts in its own best interests rather than Principal's

Reverse Agency Problem: Principal games the system an acts in its own best interests over Agent's.

Thoughts?

"where one party is expected to act in another's best interests."

As far as I'm concerned, Amex is acting in my best interests by offering 5%

Slow MS day?

A credit card customer is not acting as an "agent" for the card company.

Thoughts? Stop trying to be a bad a$$ Internet lawyer.

We aren't agents first of all. The relationship between a realtor and a house buyer is one. CC company and us is not.

And anyway, I don't see how we aren't acting in the issuer's best interest in most all cases.

A $500 charge by a MSer is equally as profitable to the CC issuer as a $500 charge by someone purchasing a high end electronic like a television. The issuer gets the transaction fees regardless.

You can't call an MSer a violator of this principal while at the same time saying someone who pays off in full each month is also a violator.

And I would disagree wholly that either party is disadvantaged. To expand further, MS on most cards is still profitable the CC company. I.E., the swipe fees AmEx receives from the merchant for a Starwood AmEx charge is assuredly higher than what AmEx pays Starwood per point. Especially given that rewards cards cost merchants more in swipe fees than rewards cards.

The CC user and the issuer operate symbiotically in this MS relationship, absent fraud/chargeback abuse or ducking out on your unpaid balances.

This is why for 99% of people MSing, they don't get any grief from their card issuer except for occasional fraud alerts. We're profitable. No reason to stop us from doing what we do.

Indeed. The proper example here would be the person at the cc company who is coming up with the cashback numbers. If that person happens to own a office supply store, they may choose to raise the cashback pct for OSSes, even though it may cost the CC company more.

We are not agents of cc companies.

afaik, the best customers for CCCs are those who leave a balance on their accounts thereby paying huge interest rates. OTOH, I pay all my balance each month, yet they still make $$ off charges I put on their card(s) via the purchase fees on VGCs I buy PLUS merchants fees they collect each time I swipe those CCs. They are betting that I will not be able to pay my balance in full and national stats reveal, there are more people who keep a balance than those who pay in full.

in this game, both parties take care of their own interests.

Where in the factoring is the part about the bankers buying taxpayer goodwill by letting us taxpayers MS freely out of fear of being caught in a dark alley by an angry mob of taxpayers during the next financial crisis? I believe that is referred to as the "French Peasants are Revolting Problem."

Where is the agency relationship?

You keep using that word; I do not think it means what you think it means.

this thread has made my day lol thanks! OP

I am 12 and what is this?

Who does CX dim sum remind you of?

How is there an agency relationship between the 'Customer' and CC Company?

Source.

Keep your day gig, don't try to play lawyer.