These flyers didn't find ways around anything, they bought unlimited flights and they used unlimited flights. Even the ones who charged money for the companion seats say that it wasn't banned in their contract, they were simply using the product they paid for.

Another example of this is USB vendor and product IDs. The USB standards body charges several thousand dollars for a 16-bit VID code; when you buy one of these, it comes with 16 additional bits of "address space" for your company's product IDs.

This makes sense for exactly nobody. Large companies are never even going to notice the $2000 that the USB consortium charges for a VID, and of course, not even the most massive international conglomerates are ever going to ship 65,536 different models of USB peripherals.

Meanwhile, the guy in the garage with an idea and a shoestring budget only needs one PID. But he either can't afford the $2000 or has much more immediate uses for it.

So an enterprising company in Holland immediately bought a single VID and started reselling the PIDs for about US $20 each. The USB Implemeters' Forum hit the roof, revoked the VID, and threatened to sue, but because their agreement didn't explicitly disallow PID resale, there was nothing they could do. It wasn't as if they could ever reassign that VID to any paying customer.

So I guess it's a good thing for the rest of us that large organizational gatekeepers are so often run by morons.

Awesome story. Reminded me of this one from Derrick Sivers:

"In 1996, I had a little record label, so I got a UPC barcode account, so I could put unique UPC barcodes on my CDs. I had to pay $750 to the Universal Code Council to get a company account, but that meant I was allowed to create 100,000 products under my account. Musician friends asked how, so I showed them how, but also said they could use one of my product IDs.

At first, I did this for free, as a favor, until friends started sending strangers my way. Because it took a little work to generate the number, create their EPS/TIFF graphic barcode, and keep track of their unique IDs forever, I charged $20.

Over the next 12 years, this made me almost $2 million."

http://sivers.org/sharing

I've actually considered this myself; invest $2k in it and get a large number of PIDs for my own purposes, and sell them off to others to recoup (some of) the costs. However, I think they've changed the rules on this for new licensees, right?

Which company does this? I may end up getting some from them.

Edit: Yep, they did indeed change it. Relevant text from the VID acquisition form:

> The USB Implementers Forum is the authority which assigns and maintains all USB Vendor ID Numbers. Each Vendor ID Number is assigned to one company for its sole and exclusive use, along with associated Product ID Numbers. They may not be sold, transferred, or used by others, directly or indirectly, except in special circumstances and then only upon prior written approval by USB-IF. Unauthorized use of assigned or unassigned USB Vendor ID Numbers and associated Product ID Numbers are strictly prohibited.

The reseller I was talking about is http://www.mcselec.com/index.php?page=shop.product_details&#... . I am not associated with MCS Electronics, but I've shipped hardware with a PID I purchased from them, and have been very satisfied.

So the Dutch company was able to keep on selling?

Nice story, thanks.

Yes, to this day.

Another notorious scheme was people buying $1 coins from the US Mint (which included free shipping) with their credit card and depositing the coins in order to pay off the credit card.

Broken systems always seem to pop up, as do ways of exploiting them to make money. Steal This Book describes all-expenses-paid vacations to gambling resorts that existed in the U.S. in the 60s and 70s. The condition was you had to buy hundreds of dollars worth of chips to gamble with. They were specially marked such that people could gamble with them but not cash out. People realized you could just play red and black against each other in roulette to exchange those chips for a complete set of regular chips that could be cashed out. (They would usually make many small bets and incur the small 0 and/or 00 cost once or twice rather than one big bet and risk losing all the money.) Practically free vacation.

The British Columbia Lottery Corporation had a similar incentive ($100 in credit) set up to promote their online gambling site. The trick involved betting on both sides of baccarat, which was better than roulette as it avoided the chance of the 0/00 outliers.

http://www.cbc.ca/news/canada/british-columbia/story/2010/09...

Some major credit cards used to give rewards on cash advances taken out on them.

I remember going to the casino and taking out a $5000 cash advance and then paying it back the same night. For about $2 in interest you got 5000 aeroplan, or air miles. I did that each weekend for 20 weeks until I got enough miles for my trip to Australia.

This is more akin to financial arbitrage but my mother did a variant of this for her car payment. The card company would send her 'checks' to use for 0% balance tansfers that she would get 5% rewards on. So she'd use the checks for her 3.9% car payment, get the rewards and pay off the card at the end of the month.

I don't quite understand the purpose here. Is the idea that you can keep rolling your credit card debt forward interest-free indefinitely?

No... From what I read people would get rewards from the credit card. So they bought say $10,000 in coins and deposited the coins back before the end of the billing cycle, winning a $200 cashback reward. That $200 is what the person doing this would profit.

That "hack" has the nasty characteristic of probably making everybody lose, maybe more than the $200 the guy was getting.

I imagine shipping was not free for the government, which also probably paid the credit card operator a fee. The credit card operator is losing money by paying rewards on a bogus transaction.

The credit card company doesn't lose money. They charge a settlement fee to the government, which more than covers the cost of the rewards program. So only the government (ie, the taxpayers) lose out here.

The taxpayers also don't lose out because the mint makes the coins and mails them and pays the credit card settlement fee for less than the face value of the coins.

Nobody loses, except people who object to the subtle inflation by seigniorage. The Federal Reserve can control that anyway.

You can also use it to get frequent flier miles - a lot of cards offer 50,000+ miles on reaching a certain minimum purchase.

Here's someone who bought $15,000 in coins: http://advancedriskology.com/the-day-i-bought-15000/

$15k is pretty small. I think there are some members of Flyertalk.com who managed to churn far more than that during the programs run.

Why is the transaction bogus?

It is not difficult to find credit cards that will rebate back to you anywhere from 1 to 5 percent of your spend

The best actual cash back on unlimited general purchases is probably 2% (Schwab used to do this; Sallie Mae Visa, Capital One Venture or their 2% business card, NASA Credit Union).

5% is basically always either category-limited (Gas, sometimes restaurants) or limited to a trivial (<$5k/yr) spend.

I personally do the American Express Starwood card, since I value Starwood points (1 per $1 in general, and some other bonuses for hotels, gas, etc.) at about $0.025-$0.04. You can also convert SPG points into FF miles at a rate better than unity.

Back in the day, paying for space segment ($200k/mo) on a business credit card meant never having to pay for a hotel suite or airline ticket.

The Chase Amazon card is also 3% on Amazon purchases, which basically means 3% on every mailable product in the world. I think it also gets you 3% on Amazon Web Services purchases...I doubt Dropbox or Netflix pay their bills with that card, but it would be amazing :)

Add Fidelity American Express to the 2% general purpose list.

Got a ref on the 5 percent part? (Ignore this if it's only for gas; I'd be interested in 5% all purchases.)

Discover rotates the category of things that give 5% back every few months, which is generally easier to take advantage of than just gas. 5% for everything would be way over the interchange fees, so it'd require some sort of catch.

There is also a limit on the amount applicable to the cashback bonus, per program, and it's usually a trivial amount like $300 (so, $15 cash back per month).

I think the point was that you racked up frequent flier miles for using your credit card.

Sounds more like a way to rack up rewards points.

No. It was for the credit card points and cashback rewards. They essentially got these points/cash for free.

I'm guessing that people did that to get miles/points from the credit card.

It has been edited at least twice. At some point, it indicated it was a means to get frequent flyer miles gratis.

A few years back there was a pepsi promo in Finland that involved collecting codes from bottles and returning them for rewards. The lower amount reward tiers were sensible, but if you collected codes from a thousand bottles, (cost roughly 1250€), you received a laptop worth 2000€. Considering you can still resell the drink, you can probably see the problem.

Link in Finnish, but scroll down for pictures: http://www.pulu.org/pro/1-1500-litraa-pepsia-ja-sony-vaio-s5

I did a similar thing in 2003 -- codes from 200 chocolate bars could be collected for a free xbox (5GBP shipping, normal cost 160GBP). This coupled with a 5 bars for 1GBP offer in a local supermarker meant I got an xbox and 200 bars of chocolate for 45GBP.

The even more famous one was Hoover, who were offering free flights to the USA if you bought a vacuum cleaner. They were shocked(!) to discover people were buying 100GBP appliances to get a free flight worth 500GBP.

Then they decided to get 'creative'. They offered people flights that involved multiple inconvenient changes, or gave passengers in the south of England flights that left from the North of Scotland and v.v. They set up fake call centers who would ring customers up and tell them that the flight had been changed and send them to the wrong airport, they would send others long complex legal forms to sign which in the small print actually waived the prize.

The result after paying out a few million quid in tickets, several 100,000 in fines and a lot of annoyed customers - is that 20years later the company that was the generic term for vacuum cleaner in the UK is now known mostly for the con.

I remember a Coca-Cola & 7/11 promo about a year back, where if you "Liked" the 7/11 page on Facebook they would give you a printable coupon for a free Coke. The first problem was that the barcodes on the coupons didn't scan so well after being printed out on a home printer and crumpled up in somebody's pocket for a few days (which undoubtedly cost 7/11 thousands or tens of thousands of man hours) and the second was that you could simply refresh the coupon page to get /as many coupons as you liked/. Needless to say, the promotion ended not soon after.

The main character does this to great effect in Punch Drunk Love, which also happens to be a beautiful film that I highly recommend. He purchases pudding to earn frequent flier miles.

Based on this story I assume: http://www.snopes.com/business/deals/pudding.asp

Indeed! That's exactly what happens in the movie.

Another recent example on reddit:

http://www.reddit.com/r/funny/comments/t7ma1/so_my_roommate_...

That didn't start with iTunes. That was a known hack dating back to my childhood in the early 90s. My 7 year old cousin and I used to do this to get free Pepsi from the "you won a free pepsi" caps.

Yeah, I did that in the 90's too. Got kicked out of a Rite-Aid for being a little too obvious about it.

My favorite is the time Burma Shave sent a guy to Mars. http://www.snopes.com/business/market/mars.asp

There's this famous case too: http://www.snopes.com/business/deals/pudding.asp

The peeking-under-the-bottle thing happened long before iTunes. Dr. Pepper had caps you could redeem for a free bottle. For me, this meant I had to buy maybe one bottle per week, and I'd drink the rest of the week for free by picking out all of the guaranteed winners. (I also got kicked out of quite a few stores doing this.)