Returning a gift? The buyer loses the rewards points
Points are forfeited after any refund to prevent users from gaming the system
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com
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Dear Cashing In,
received a gift and returned the item to the store without the receipt. The
clerk returned the amount of the purchase to my credit card (a card that was
not used to make the original purchase). Now, I have lost reward points based
on the amount of my return. Is this right? In my opinion, I shouldn't lose
points. In effect, I'm just paying off my account with the return. Thanks. -- Jim
comes to credit cards, issuers have devised all kinds of policies and
procedures designed to combat fraud but too often those rules wind up ensnaring honest
folks. Think about all the time you spend creating and changing passwords with
just the right number of uppercase letters and numbers, or trying to guess how
you answered a security question a few years ago. Those measures are necessary
only because people try to hack into accounts.
this is a similar case. On its face, the situation you describe seems to make
little sense. It doesn't seem fair to lose miles simply for the sin of
returning an unwanted gift.
let's approach this scenario as if we were unscrupulous people. If you could
only gain reward points by buying items on your card, then people would buy
items, rack up points, then return their purchases to the store and have no
fear of losing the points. Your case is an extension of this: If you could buy
$1,000 worth of jewelry, earn 1,000 reward points, give me the jewelry and have
me return it for a full refund without penalty, I could just pay you back the
$1,000 and at the end of the day, neither of us is out any money, the store
has its jewelry back and you have 1,000 extra reward points.
that sound a little shady to you? It does to me. If we kept up our scheme, I
think the store would eventually become suspicious that I was returning so much
merchandise and start to ask some hard questions or impose limits on me, but by
then, you might have accumulated enough points for a dream vacation. (You could
at least extend the courtesy of including me in the trip, since I'm essential
to the success of your quasi-criminal enterprise.)
scenario brings to mind the old dollar coin scheme, in which people bought thousands
of dollar coins from the U.S. Mint using reward credit cards, then deposited
them in the bank, paid off the cards and continued buying. The Mint eventually
caught on and stopped selling the coins via credit card.
read the fine print of the terms and conditions of most reward credit cards,
the card companies cover themselves by saying they will report the amount of
"net purchases" to the rewards program every month. So if you spend $600 but
have $200 charged back in returns, the card company will report a net purchase
of $400. If you spend $200 and have $600 in returns, it will report a net purchase
of negative $400.
these terms are more explicit than others, but most operate the same way.
Barclaycard, for instance, spells it out in the terms for its cards
connected to US Airways' Dividend Miles program: "If credits for returned
Purchases exceed new Purchases during a billing cycle, we will report negative
Net Purchases and ask US Airways to reduce the Primary Cardmember's accrued
Mileage Credit accordingly."
the lesson here is not to put a return on a rewards card you care about. Opt
for a debit card instead, or a non-rewards card.
you could try calling the card company and rewards program to explain the
situation and see if they show you any mercy. But their terms and conditions
probably cover them, so you're most likely out of luck.
See related: Giving miles or points through a gift registry,
Sign up, max out, cancel, repeat: Rewarding, but dangerous to credit?
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Published: August 12, 2014