Although I have worked for the better part of the decade providing credit card payment processing and fraud screening services to major retailers, take this for what it's worth (i.e. free advice worth every penny).

If your employer does not verify that refunds are made to the same card, they're certainly in violation of their merchant acquiring agreement with the bank providing the processing services to them, and will be subject to action ranging from warning to penalty fees to ultimately the loss of their credit card accepting privileges in extreme cases.

If an employee at any of the major retailers I know was doing what you described for personal gain and their employer found out, they'd be reprimanded and/or terminated.

Sure, if you have the necessary 'moral flexibility', your employer has failed to put controls around this process, and you're doing it just once or twice, you can get away with it. If someone working for me was doing this and I found out, they'd be on the street within the hour. Well, maybe not on the street if it was the first instance, but certainly it would be a career-ending moment for them at my organization.

Sami

I have returned several items to Wal-Mart and every time at different stores in different states I am given the option of having the refund returned to my card or get cash. I usually choose the cash option. I doubt they'd give me a $7,500 return in cash, though. I'll ask.

[QUOTE=sany2]It is, in my opinion, certainly not illegal. Whether it is morally acceptable, only you can say.

btw, it isn't fraud,... ...at least not directly.QUOTE]


So is it fraud? Whether directly or indirectly fraud is fraud.
I'm no lawyer, but frankly the OPs scheme is certain to be classified as fraud or a derivative thereof. (period)

more than likely because those were debit transactions (enter pin #) rather than credit card transactions (where you sign). you can do both with debit cards with mc or visa logo.

[QUOTE=psyflyer]oddly enough, that is not my quote.

It was as follows:

It is, in my opinion, certainly not illegal. Whether it is morally acceptable, only you can say.

btw, it isn't fraud, because you aren't deceiving anybody (unless their is a rule that the refund must be made to the credit card used for the purchase. If there were such a rule, you may be defrauding the business, but you are certainly not defrauding either credit card company or the airline.... at least not directly. Credit card company a still gets the money for the purchase and for the miles that the airline bought, credit card b gets the credit refund. The only problem would be the fees, which would still be charged to the merchant by credit card company a. I also have a feeling that the credit card company might not accept a refund credit from a store that never made a charge to the card.)
Don't know how that happened.

When quoting someone, if you want to skip something that is irrelevant or not needed, you use "..." I have done that above as an example

When you said:

btw, it isn't fraud, because you aren't deceiving anybody (unless their is a rule that the refund must be made to the credit card used for the purchase. If there were such a rule, you may be defrauding the business, but you are certainly not defrauding either credit card company or the airline.... at least not directly.

psyflyer was (I assume - please correct me if I am wrong) basically summarizing your quote - "you are not defrauding either the credit card company or the airline... at least not directly. "

Cheers

I would have to wonder if the credit card company that gets a $7500 credit without any corresponding purchase will think. Large, unconnected refunds are usually signs of merchant fraud.

Old discussions of similar, but not identical, ethical and legal issues:

http://www.flyertalk.com/forum/showthread.php?t=474613

http://www.flyertalk.com/forum/showthread.php?t=7798

No offense, but a person who "work(s) for a retailer of high ticket items" will not know everything about what gets flagged as possible fraud. This is 2006. There are various scams related to high-ticket returns (and no, I am not going to say what those scams are) and there are things that can get a person flagged as a possible thief. If a person established a pattern of doing this, imagine that person trying to justify to someone why he was doing it, and what his real purpose was, and why he was just a goober and not a thief.

Even if a person's moral compass is off-kilter and the person doesn't see anything wrong with doing this, it's an absurdly silly thing to do.

you are wrong, except for the part about not being a lawyer. (period)

the specific scenario described by the OP is not fraud. And I'm not sure what derivatives you are speaking about, but it is interesting you make an absolute statement like "is certain to be classified as fraud" but leave yourself a very vague escape like "or a derivative thereof". Are you certain or not?

That's right. I am a lawyer, and this is not fraud (as that term is used legally). I agree with dhuey, its morally dubious, but not illegal.

You have a point there, but I know of at least one return where the original purchase was with my AMEX. I still got the cash option.

To further explain my money laundering comment. Located deep within the T and C for merchants from the Credit Card Companies, are descriptions of prohibited acts such as the crediting to another account of a refund. (many people do not read all the small print in these T and C's because it usually is 30 to 60 pages of "Lawyer-speak") Also included is a statement about the the signing officer of the company not be able to use his own credit card thru his own company's processor. These are all to prohibit money laundering and "Instant loans" from the Credit Card Processor to the merchant. (Discover/Novus agreement specifically mentions money laundering) The Money Laundering would occur when someone pays a merchant money for a supposed transaction and the merchant refunds the money thru the Credit Card Company. When you transfer money thru a Credit Card Processor that does not have a legitimate basis, then that can be called money laundering. The refund to a different card is not a legitimate Credit Card Transaction. (Similar to me giving myself a Credit Card Refund to my own card, or another, without actually making a sale.)

Of course its fraud - against bank number 2. They will end up eating the interchange rate (e.g., if the store pays 3% for the card and you charge $1,000 on card 1 but return it to card 2, the supplier is whole but bank 2 will only get back $970 and have to pay you $1,000). Sounds like theft to me. Let alone the cost of the item that you have to return if the seller has to resell it as used.

as far as I understand, money laundering (as an offence) is the act of taking illegal proceeds and making it appear as legitimate income. You can move money back and forth all day, but it is not money laundering unless the source of the funds was illegal. It may be a violation the T&Cs of the agreement with the credit card company (and other financial institions involved) but it is not money laundering.

I've actually heard this is common practice for people trying to max miles/rewards using Costco as an example. One can purchase a very expensive item online at costco.com as they sell items up to $100,000+ there, and then return at any costco warehouse. At the return point they will not refund onto credit card and will only refund cash/check. So I'd guess many people use something like this loophope rather often.

Illegal, probably not, unethical tougher to say...