The Dark Side Of Earning Credit Card Points: DansDeals Radio Interview And Podcast

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A few weeks ago I wrote about the firsthand experiences of people who lost hundreds of thousands of dollars swiping their cards for businesses.

DDF member chayal101 took it upon herself to spread the word by creating an ad that newspapers ran as a PSA:

 

2 weeks ago, I took part in a live panel discussion on the Zev Brenner radio show about one of the businesses that swiped several million dollars on people’s credit cards before going bust. You can listen to that interview here The lawyer for one of those businesses, Aaron Twersky, revealed that he’s involved with cases that exceed $50MM in similar credit card swiping schemes!

I also spoke with David Lichtenstein, the billionaire CEO of The Lightstone Group. That interview can be heard from 13:25-47:00 on his weekly Headlines Podcast here. We spoke about several credit card schemes including swiping and giving over your social security number, the need for financial literacy courses so that people can know how to avoid similar traps, and what my feelings are about selling miles. David also challenged my stance on writing about airfare price mistakes, which is something I write about often in “Rules of the Deal” posts. I also wrote about it 7 years ago in this Yated article after the $336 El Al tickets to Israel in 2012.

I’ve been writing this blog for nearly 15 years, but these were my first live interviews. I’d love to hear your thoughts in the comments!

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87 Comments On "The Dark Side Of Earning Credit Card Points: DansDeals Radio Interview And Podcast"

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boruch parnes

@Dan So Far I only listened to the david lichtenstein one you did an excellant job!! Thanx

Jay

Chayal101’s DDF profile indicates Male.

Sam

Chayal means soldier in hebrew

chayal101

It was a Purim joke… 🙂

fan of dan

It seems like Lichtenstein had you cornered. You agreed that you don’t know for sure everytime that the airlines purposely made it look like a price mistake, that the fact that there are always extra seats isn’t relevant, and at the time when you posted some of these deals, the FAA was not permitted to walk back the price.

In the end, you fell back on, “I asked my Rav and he said it’s OK, you should ask yours”.

In the final analysis, are you willing to agree that even if there is a way to finagle out Halachically according to your halachic advisor, it was still a morally questionable thing to do?

Truth Teller

I don’t seem to see any difference between ”halachically” and “morally”

shmo

Presumably letter of the law vs. spirit of the law.

reb yid

“In the end, you fell back on, “I asked my Rav and he said it’s OK, you should ask yours”.”

That’s not a “fall back”, that’s the normal way we do things. No different than a shailah in hilchos borer, for example. If Lichtenstein said it’s ossur, you’d say what were the deios lekan u’lekan, and then you’d say “but ask your rav what you should do at home.”

Sam

What do price mistakes have to do with credit card swiping schemes? Why did that even come up?

Liam K. Nuj

Because the one being interviewed about one topic is also an expert in the other related topic. Not too hard to make the leap.

Moe

hey liam, do you realize that if you spell your name backward you get junk mail? you can probly sue your parents for a load of $$$.

Stu Pidd

If you do, your parents will put you on their junk mail list.

Moshe26

Excellent job!

CLE Rocks

Just listened to the podcast. Dan, you couldn’t have been any more clear. You can’t compare an instant grocery purchase to an airline ticket transaction.

Great job!

Mendy

Great job Dan for standing up to Lichtenstein in regards to price mistakes on airline flights. He brought it up to attack you, which is apparent by continually asking about posting a price mistakes based on the old rule of the FAA even though that does not apply today!!

Also showing your strengths about you have a Rav (and that ‘wow’ in regards to your Rav saying it’s ok to post a price mistake was disgusting to say the least).

Kol Hakavod. Very Proud to be a fellow Lubavitcher!!

Faivel

Man 2019 chassidus rocks! Dan is the pride of Lubavitch…

chaim

is there a way to download the zev brenenr for offline viewing? thank you

Shmuel

Point manipulation is oftentimes borderline unethical, since they violate many cc’s terms of use. Other stuff is unethical, and some act straight out illegally. Many businesses are okay with leaving customers high and dry and simply declaring bankruptcy, as most customers are unsecured creditors, and such creditors are one of the lowest or last of the creditors to get paid back. An easy way to justify it!

Don’t get me wrong, Dan provides a tremendous benefit to the community in terms of notification of deals, flights, points on credit cards, but gaming the system via points/flights espouses and facilitates the impropriety we witness. Simply put, don’t put yourself in a position to get scammed. It’s not worth it.

reb yid

Mazel tov on your jump from one broadcast medium to another!

Sam

Would’ve like to hear more about the legal matters involved in these credit card schemes. If there are any. And what happens to those who were effected by this.

Boruch

Great interview, especially not allowing this lutkak to turn you into a רשע

But why give so much legitimacy to YAFFED

Texas Totty

Why the hate?

HSS

Dan –

Thank you for bringing this to light. One thing that still concerns me is both long timers and many newbies are still actively involved in “buying groups”. They are purchasing items (they don’t want or need) and having those items sent to them and delivered to a buying group or even sent directly to the buying group’s warehouses and then are reimbursed for the purchases. I agree that the business model here isn’t a direct parallel but can you please post on your site your thoughts about the potential pitfalls and dangers of these transactions as well? I am confident that the operators of these groups are very well meaning but people need to understanding that the small 2% rewards they receive on their credit cards is not worth losing their houses or financial future if the operator of the buying group makes an improper business decision that causes his business to go south and they get caught holding the “hot potato”.

Personally I used a buying group only once to reach a signup bonus threshold which I could not have reached otherwise without manufactured spend. However I was very conscious not to charge any more money than I knew I had cash on hand that I could pay the bill as soon as it came due even if the buying group delayed in repayment. Yes I did get paid back in full but I was nervous the entire time… I see people using buying groups all the time for dollar for dollar manufactured spend and it truly baffles my mind.

Can you share your thoughts on this activity before it is too late?

-HSS

(PS – To all those owners/operators of buying groups I do not wish any harm to you, and I am not looking to shut down your business but at the same time people are giving you unsecured loans which are by nature very dangerous and they will be left with the financial burden not you if you default. Operating debt and capital risk should be carried by the business itself who is earning the profit not some innocent Kollel guy looking for manufactured spend. People must be educated.)

Israel

I listen to David on a regular basis and compared to others who he has pushed against the wall (i.e. everyone), i have to give you major kudos to holding your own. Your incredibly calm demeanor was/is outstanding. Keep up the great work you do!! Also i agree with David 100%, the mere fact that you have a Rav that you ask sheilos to, speaks volumes about you! keep it up!

Josh

Wow! You’re extremely brave for going on the David Lichtenstein show, he pushes people to no end and yet you stood your ground pretty tight. Impressive and brave. Nice work.

Matthew

When a passenger makes a mistake, the airlines still charge you to change it cancel.

Why feel bad for airlines that make a mistake?

Eli

Great point!

Yoel

@Dan Why is the lawyer disputing the common threat that some are saying, that if you go out in public I will definitely not pay you back, this is very commonly used even within our community what is it trying to hide?

Concerned

Dan, you did a great job. Both interviews were excellent.

My hearth goes out to all the “victims” (if we can classify them as such… I BELIEVE a majority of them knew they were involved in a crooked scheme.)
However, as long as we don’t address the root cause these scams will happen again.

We can introduce financial literacy classes in Yeshivos from today till tomorrow and nothing will change. Financial literacy classes will help as long as it’s grounded in the reality and compatible with our lifestyle and education. No, we cannot expect young people to form a family with no basic financial means.
With that being said, some people are doing this ‘shtik’ out of desperation and others are doing it as a way to fulfill the get-rich mentality that is going around in our community.

Unfortunately, nothing will change because no real change is being made. You don’t have to be a prophet to predict this – more of this will happen. Is anyone familiar with the zeekrewards scandal that claimed so many victims in the chareidi community? It was only a few years ago, and here we are again…

anonn

With all the discussion, lets not forget that one of the greatest mitzvas is giving someone a loan. Why do you think there are so many halachos about not taking interest? Not only that, we arent even allowed to remind the other person that the loan is due in a way that would make him feel bad. All of this is telling us that its important to give a loan and not as important to get the money back.

At the end of the day, Hashem created ‘rich’ people and poor people. Rich means anyone who has something that someone else doesnt have. The ‘rich’ persons job is to help the poor person. Hashem runs the world. Hashem can always give you the money back in a different way.

We hear so many stories about the alter heim, where people would give their last dollars to help others. While we may not all be at the level to do this, and we may need to live more “according to the way of the world” and not give our last dollar, and be more “responsible”, nevertheless we should not forget the importance and great mitzvah of giving a loan. Even if it doesnt get paid back.

AY

It’s not a loan if you don’t own.
If you treat it like a loan and the loaner can’t pay it back would you take responsibility?

bigissy

Dan,

Why are you against selling miles?

Ryan

I listed to the Lichtenstein podcast.

Your professionalism is refreshing but I do not fully agree that financial illiteracy is the main issue.

Sure there are the naive ones, but by and large people understand the risks. They simply believed the reward was worth the risk.

Money lending is not a new business. Unsecured loans are common within close communities. These transactions are similar to purchasing bonds (as opposed to shares) in a start-up. The fixed-rate of return here is roughly 2% (not great) and you are granted no equity.

You are effectively leveraging an asset you have – your ability to borrow – to earn a return. Investors do that all the time. There is always a risk you make a poor investment. The difference here is the unorthodox method.

If someone were to create a fund that acted as the middleman I think it would lessen the issues. They can solicit funds by means of asking people to lend money and earn points. They would then be responsible to lend to businesses. They can conduct due dillegence and back-stop defaults. The rate of return would go down as there are more parties to pay but it would significantly legitimize the industry.

The devil is in the details but clearly there is opportunity in this space.

moshe zurich

along his life he bankrupted lot’s more money then all the ticket’s sold on dd thru price mistake so it look’s like the ganev became the shomer great for purim

Meilitz Yoisher

Why is declaring bankruptcy the same as geneiva?

moshe zurich

if you something about how this bilonare’s do business you would know that a lot of that is only possible wen using all the lop holes in law and agreement’s to get rich on the back of the banks and private investor’s to but it simple they do not pay back loan’s even when they CAN AFFORD IT in order to get richer and rellie on the letter of law even it harm’s other people and that’s what we do with price mistake’s now come’s my first comment

moshe zurich

did not mean the word ganev just used an old good vort

Business man

Dan thanks for your website and all your work. Your posts about travel airlines etc. are all fascinating. However the posts about amazon items selling at a small discount to me are a bad idea. If the average person who checks the website daily to see these discount were to spend his time trying to improve his financial situation ie make another sale, improve his financial value to his employer etc.
the financial return would be way greater than the few dollars saved on a item
Let me know your thoughts.

Yuda

Just wondering Dan, I noticed that years ago you used to post great “hidden City” deals – of which I have personally flown on and very much enjoyed, and then at some point you just stopped cold and haven’t posted such a deal in years. Can you please provide an explanation? Has your opinion on the moral/ethic/Halachic side of it evolved in some way?

Jerry

I myself was victimized. However when I threatened the vendor with an FBI complaint they backed off and reversed the charges. They are all too eager to make a sale when NOT verifying the legitimacy of the cardholder. Additionally name the names, of the scammers. the one who stole from me, eventually victimized a well known electronics company for well over $300K. If allowed I will post his name, he fled to Israel, land of the indicted.

FPS

Great interview Dan.

One VERY important correction: You stated that there is nothing wrong legally lending money to a business via credit card.

This is absolutely incorrect.

The merchant is forbidden contractually (as a civil offense and possibly criminal offense) to swipe cards to borrow money.

Ari

These buy groups are heimish nonsense. Use your credit card the right way and don’t look for a magic trick to get your bonus. The risks far outweigh the rewards in this case. Dan, thank you so much for posting this article; keep up the great work!

Abey

Very well explained @dan !! Staying on course and plating it in a very simple way. I think you did great

yesitsme

A couple of years ago I came to shul as usual, and I met a yungerman didn’t seem to be too excited so I asked him whats happening?
He tels me: A few months ago I was learning אם כסף תלוה Rashi explains אם כסף תלוה – ר׳ ישמעאל אומר: כל ׳אם׳ ו׳אם׳ שבתורה רשות, חוץ משלשה, וזה אחד מהם. as he finished learning he walked out and someone approached him and asked if he could borrow a few thousand dollars, not thinking to much he lent that guy the money and now he crying on the loss there’s no way back.

I replied: you learned the sugya very good but there’s one word that slipped your mind it doesn’t say תתן it says תלוה if you cant make sure its a loan and not a gift have someone else do the due diligence.

Ah giten

I listened to both of them, nice job @Dan.
That guy really wanted to nail you, but suprisingly you stayed so calm, and answered appropriately…
Is that your way into getting all CSR on your side?.. lol
I enjoyed it very much, but was almost getting excited when he asked you for 1 good deal to share, I maxed the volume, but it didn’t come. Hmmm.
Maybe next time..

Eli - your 7th grade Rebbe

The R’ Chaim Brisker of “DEALS!”
Must have been your seventh grade Rebbe

Efy

Hey Dan, I’ve been under the proverbial rock all these years and am just starting to learn about this whole system of making money through opening credit cards and earning rewards, but I’m not interested in doing anything halachically or legally prohibited. Can you please clarify–are you saying it’s wrong/illegal to sell just miles or also the points from cash back cards? Thanks!

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