Recap: AA 160K Scam, Walmart Drone Delivery & More

 

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Mark
Mark (@guest_1056027)
September 16, 2020 11:54

For anyone who still does not know exactly what the guy did, this flyertalk article explains it.
https://www.flyertalk.com/forum/american-airlines-aadvantage/2024978-man-pleads-guilty-aa-gift-card-ticket-scam.html

James Bond
James Bond (@guest_1056090)
September 16, 2020 14:01

Thanks for the link. This comment in flyertalk sums it up:

“So I looked up the case on PACER and found the “criminal information” (selected pages attached) that explains the scheme. Evidently Schwarze bought gift cards with real credit cards, then he would use those gift cards to buy AA tickets, and then he went to the AA refunds site… but by entering the Gift Card “MSR” (Miscellaneous Sales Receipt) number rather than a ticket number, he was able to exploit a weakness in AA’s refund-system technology to cause AA to refund the gift card while retaining the validity of the tickets bought using the gift card.

So at the end of the day, Schwarze’s credit cards were not charged anything (at least, net of refunds), but he was able to enjoy the value of AA tickets bought with gift cards that had been refunded (and presumably in some/many cases, he was able to send others flying in exchange for cash that he kept).”

James Bond
James Bond (@guest_1056605)
September 17, 2020 11:02

Thanks for the link. This comment summarizes the case:

“So I looked up the case on PACER and found the “criminal information” (selected pages attached) that explains the scheme. Evidently Schwarze bought gift cards with real credit cards, then he would use those gift cards to buy AA tickets, and then he went to the AA refunds site… but by entering the Gift Card “MSR” (Miscellaneous Sales Receipt) number rather than a ticket number, he was able to exploit a weakness in AA’s refund-system technology to cause AA to refund the gift card while retaining the validity of the tickets bought using the gift card.

So at the end of the day, Schwarze’s credit cards were not charged anything (at least, net of refunds), but he was able to enjoy the value of AA tickets bought with gift cards that had been refunded (and presumably in some/many cases, he was able to send others flying in exchange for cash that he kept).”

Peter
Peter (@guest_1052216)
September 11, 2020 13:30

I’m not defending that guy for intentional fraud but… shouldn’t AA be responsible for its own glitch? It seems to be entirely an airline’s discretion to let a person get on the plane after agreeing to cancel the ticket and provide refund.

There have been times when I requested refund on purchases and the merchant (e.g. Amazon) told me to just keep the stuff. So I ended up with something that I did not pay for. If I somehow crack the code for when Amazon will avoid the trouble of processing a return, and get a bunch more free stuff, does that make me a criminal?

We in this hobby love bending the rules and finding “sweet spots”. Likely most of us had to explain to the layperson why it’s not unethical to sign up for a credit card that we don’t intend to keep. When exactly would it be going too far, and when does the fun become illegal?

Fred
Fred (@guest_1052238)
September 11, 2020 14:02

I think the dollar amount definitely comes into play. For me, I don’t get refunds for things unless there is a legitimate reason to do so (even though reasonable people may disagree on what’s reasonable). It seems like this guy had a premeditated plan to request refunds even though he intended to use the tickets/gift cards (given that he was buying air travel on behalf of other people). Now, I got a refund for a bag of dog food that was busted, and I decided I’d still give it to my dog – if I intentionally looked for damaged items to do this with (or tampered with the items myself), and scaled it, that would probably be analogous. But, I suspect Amazon has something in place to note when people buy and “return” large numbers of items (and hopefully AA figured out that they need to fix this issue before this story went public).

lilurbanachiever
lilurbanachiever (@guest_1053767)
September 13, 2020 02:53

“I suspect Amazon has something in place to note when people buy and “return” large numbers of items”

No need to suspect – Amazon has a rigorous loss prevention policy in place and a serial “returner” gets banned pretty fast. Most if not all merchants have such policies, even the likes of Macy’s, but Amazon’s is one of the more strict ones. And I heard some merchants actually share such information with each other.

As for this guy – as I understand not only he abused a loophole but he actually stole the money from AA – the tickets were still used after the refund, i.e. some people managed to fly for free. Oh, and scamming airlines is actually a federal crime, see e.g. Soprano’s first season. This guy is very lucky he will probably only get probation.

CongestionCharge
CongestionCharge (@guest_1052195)
September 11, 2020 12:57

This is a poor article, 690 gc’s even if all $150 is only $104k. Maybe, He bought $80k in GC got that amount in free flights and that amount refunded.

YoniPDX
YoniPDX (@guest_1052247)
September 11, 2020 14:05

He also took cash (zelle/Venmo/check) from friends and family for trips .

So double dipped (got refund for GC plus got cash on top of the refunds).

JR
JR (@guest_1052116)
September 11, 2020 10:02

So were the tickets still valid after he asked for a refund? That’s the part I’m confused about.

Fathiss
Fathiss (@guest_1052142)
September 11, 2020 11:08
  JR

Yea that’s the question. It’s a nonsensical article without an explanation.

YoniPDX
YoniPDX (@guest_1052251)
September 11, 2020 14:06
  JR

Yes that was the loophole in the method he used to refund.

Mark
Mark (@guest_1052606)
September 11, 2020 15:13

So the trick was to buy tickets with a gift card, and then ask to refund them to a credit card?? And that kept the ticket alive? That is so weird. Why would AA even agree to do that? I thought they always want to use the original form of payment.

YoniPDX
YoniPDX (@guest_1052647)
September 11, 2020 15:26

No it was a method he was using to get the GC to refund to CC that was the loophole AA didn’t know about – once or twice he probably would have gotten away but abusing it he may being going away. Fruad requires intent.

Mark
Mark (@guest_1052104)
September 11, 2020 09:36

I don’t get what this AA guy did. The article says he bought gift cards with a credit card, then used the gift cards for tickets, then cancelled the tickets and got refunds to his credit card? Even if that all worked, how is he gaining anything?

Chirovegan
Chirovegan (@guest_1052105)
September 11, 2020 09:39

I think there was a glitch where the tickets didn’t really cancel after he canceled them and he flew for free. That was my understanding from reading the comments.

pizza
pizza (@guest_1052112)
September 11, 2020 09:46

Yeah seems like the person who wrote the article didn’t fully understand what was going on, but my guess is that the GC funds were refunded to his personal CCs, but for whatever reason, the funds stayed on the GCs.

Jenny
Jenny (@guest_1052136)
September 11, 2020 11:00

Yes, pizza is right. That’s what happened. He asked for a refund on GCs, and the refund was processed back to the credit card, but the GCs didn’t get canceled.

Samosa
Samosa (@guest_1052884)
September 11, 2020 17:21

I still don’t understand the scheme. If what pizza is proposing is true, then why Laude man bought 690 GCs? If funds stayed on the GCs he could have kept using the same GCs, lets say 50 GCs, to buy new flights.

Maybe man
Maybe man (@guest_1053194)
September 11, 2020 21:57

Answer is greed

James Bond
James Bond (@guest_1053423)
September 12, 2020 10:22

My guess is the AA glitch allowed a couple things to happen: once the gift card was used for a purchase it could not be used for a second purchase, he would request credit for the purchase back to a credit card, and then the gift card funds were free again for another purchase.

The article is poorly written and does not explain the scheme very well.

YoniPDX
YoniPDX (@guest_1052119)
September 11, 2020 10:19

I too wondered what the big deal was it simply sounded like arbitrage, not fraud, theft etc.

But reading the legal complaint – a loophole existed so he could refund the 690 AA GC back to his Credit card(s) but the airline ticket(s) remained valid and then were used.

i.e. like returning a computer and getting a refund at Best Buy but still walking out the store with the computer after the refund because of a loop hole.

He also did it for friends and family who gave him cash/zelle/venmo for air tix. They paid and enjoyed flights but he refund an keep the refund .

Mark
Mark (@guest_1052208)
September 11, 2020 13:18

I still don’t get the sequence of events. He used the gift cards to buy tickets, so then the gift cards should have $0 left. So he couldn’t have asked for a refund of the gift card, right? Or was he trying to use the brief period of time between using the gift card to buy the ticket and having the balance removed from the gift card. And what could he have done AFTER the flight? Where was there still value to retrieve at that point? And how do you ask for a refund of the gift card anyway? Was he claiming an unauthorized charge on the credit card? Or was he able to do something in the 3 days after buying the gift card when you supposedly cannot access it?

James Bond
James Bond (@guest_1052200)
September 11, 2020 13:06

Very confusing and poorly written article in a major newspaper, LOL. Editor wake up!

“Either before or after a flight, Schwarze would apply for a refund and then get that money refunded to his credit card, Goldsmith said. The money should have been refunded to gift cards that were nonrefundable”

I am guessing he was getting refunds back to his credit card and the gift card funds stayed intact. Basically, earning 100% on his refund.

Jenny
Jenny (@guest_1052230)
September 11, 2020 13:56

Exactly!

Gadget - Bank Bonus Geek
Gadget - Bank Bonus Geek (@guest_1052814)
September 11, 2020 16:34

And, then acting as the friends and family travel agent, probably offering them half off their next flight if they paid him directly because he was going to use his miles for the charges. I’m guessing he would probably tell people… so graciously serving your needs with miles he couldn’t use.

But yeah, the article does not make sense. You can read between the lines… for every dollar he spent, he was probably getting $2 back. Then, book & cancel the next flight, then refund again… exponentially getting more and more free money.

Randall
Randall (@guest_1052096)
September 11, 2020 09:11

Laude man getting off with probation after scamming AA out of over $100k. $10 his kids go to MICDS

J T
J T (@guest_1052131)
September 11, 2020 10:51

Safe bet.

Dan
Dan (@guest_1052187)
September 11, 2020 12:40

Midwest reference FTW! How you like that coastal folks?

Jenny
Jenny (@guest_1052231)
September 11, 2020 13:58

It’s almost half as expensive as Phillips Exeter Academy