Category: Shenanigans

Introduction

The Coase theorem, winner of the just made up MEAB award for “best theorem with the most obtuse Wikipedia description possible” award, says essentially that the value of something can be measured by what you’d have to pay someone to give it up. (Editor’s note: Take a couple of minutes and read the first paragraph of the linked Wikipedia article, wowza that’s bad!)

Example

Let’s illustrate with America’s favorite fruit, bananas. How much are bananas worth in your life? Would you give them up forever if I paid you $1? What if I paid you $10,000, or maybe even $40,000? The smallest number that causes you to swear off bananas forever is, according to the Coase theorem, their total worth.

Making it Real

When assessing how risky a manufactured spend stunt is, the Coase theorem gives a concrete way to assess whether or not one should attempt the stunt, knowing that it might lead to a bank shutdown.

Let’s say, for funzies, that there’s an opportunity to earn 7-8x transferrable points for a cost of ~3%, with effectively unlimited capacity (yes, this has happened, and yes, more than once; no, sorry, I can’t share a play like that right now). If a manufactured spender went as hard as possible with 8x earn on 3% cost, most banks or credit unions would axe that account within weeks or months, and the relationship with that bank would likely also be fried for at least 7-10 years if not forever.

So, can that manufactured spender earn enough in weeks or months to make the play worth frying the relationship? If yes, LFG I guess.

A Case Study

What’s MEAB’s Coase theorem valuation for a few things?

Have a nice weekend friends!

Honorary MEAB award for Wikimedia, Inc.

  1. Last week two Hilton no-lifetime language offers surfaced on Hilton personal cards, and DDG notes that there’s now one for the Hilton Aspire personal card too.

    – Hilton Aspire (NLL, new): 175,000 points after $6,000 spend in six months
    – Hilton Surpass NLL: 130,000 points + Free Night Certificate after $3,000 spend in six months
    – Hilton Honors NLL: 70,000 points + Free Night Certificate after $2,000 spend in six months

    Remember that contrary to churning wisdom, AmEx NLL links don’t govern whether or not you’re going to get a bonus. Instead, the pop-up does. NLL links are special though because they’re less likely to give a pop-up. Also note that sometimes you can get around a pop-up with trickery, but only sometimes.
  2. Alaska Air has a paid and award fare sale through Monday, and there are some gems:

    – Transcon flights pricing at 9k miles
    – Short-haul to Mexico pricing at 4.5k miles
    – Hawaii flights pricing at 9k miles

    There’s lots of space available August through October, and some availability in November before Thanksgiving.
  3. American Express has targeted offers for opening new business checking accounts through July 31. Both require the funds to be deposited within 30 days and held for another 60. You also need five eligible transactions, which for me means five scheduled ACHs of $1.00:

    – 50,000 Membership Rewards: $7,500 deposit
    – 70,000 Membership Rewards: $15,000 deposit

    There are two common fallacies that many churners share: (1) Raisin day doesn’t exist, and (2) there’s no way to get this bonus multiple times. (Thanks to DoC)

The Raisin Day lobby has a point.

Background

Behind most FinTechs is one of a handful of partner banks, common ones include: Evolve, Stearns, Sutton, Cross River, and Celtic, but there are others. Somewhere between an average FinTech and a partner bank you’ll sometimes also find a Banking-as-a-Service player, and there are even fewer of those. Common BaaS names that you may have heard of are Solaris Bank, Green Dot, and Solid.

NOTE: In case you’re wondering, Banking-as-a-Service is nicknamed BaaS because the finance industry often lacks creativity and tries to hide it with focus group generated names designed by committee to appeal to millennials on paper, but the names they arrive at don’t actually appeal to millennials in practice.

April Showers

Synapse, a somewhat popular BaaS platform, filed for bankruptcy in April and for the most part no-one noticed because everything seemed ok for FinTech platforms built using Synapse, because TabaPay (yet another BaaS) struck a deal immediately to buy Synapse’s assets and assume its business operations.

May Gray

A few days ago though, TabaPay announced that it was terminating its purchase agreement of Synapse because of issues with TabaPay’s partner bank, Evolve, funding accounts related to the transaction. Of course, just like a reality TV show, Evolve says that it’s not true because of course they did. Then, Evolve froze the assets of multiple FinTechs built on the Synapse platform because of course they also did that.

After the agreement was called off on Tuesday, a bankruptcy judge went on record to say that up to 20 million FinTech depositors are at risk due to Synapse’s bankruptcy and the failed deal. What does at risk here mean? It’s not fully clear, because typically a BaaS’s partner bank holds custodial accounts for customers and those are FDIC insured, but if they’re frozen and you can’t withdraw them, then FDIC insurance doesn’t mean anything for access to your cash. Additionally, depending on the financial structure of the custodial account, FDIC insurance may be insufficient too.

The Effect on FinTechs

Since Evolve froze FinTech accounts worth $114,000,000 related to Synapse this week, we’ve seen ripples through multiple FinTechs including Juno and Yotta, each of which have had their customers’ accounts frozen by Evolve. My personal, uninformed opinion after watching the Silicon Valley Bank drama is that the federal government won’t let FinTech users lose this money, but of course my opinion tends to have no bearing on reality.

The Advice you didn’t Ask For

Juno had been an interesting tool for manufactured spend at multiple points in the past, but that’s changed recently even without the Synapse drama. Some manufactured spenders still have significant funds on deposit that’s no longer accessible though, and there are indications of issues at other FinTechs too, including but not limited to Yotta. So, while the Miles Earn and Burn way is “always be probing”, I’d sit back on probing any FinTechs that might be involved with Synapse for the time being.

Good luck out there friends!

The finance community’s premier product and industry name committee.

Finally our long-lasting struggle as a species is over: It’s not raining tacos anymore, but instead it’s raining Avios, or at least drizzling them.

New Cards

Two new cards issued by Cardless entered the market yesterday. Taken at face value they barely qualify for /r/mildlyinteresting content, but since when do we take anything at face value around here?

Cardless Privilege Club Infinite

This is an all time high (and all time low) sign-up bonus (affiliate link free application):

  • 25,000 Avios after one transaction
  • 25,000 Avios after spending $5,000 in 90 days
  • 10,000 Avios if you apply by June 4
  • 150 Qpoints toward status
  • $499 annual fee

Ongoing spend:

  • 5x on Qatar
  • 3x on “restaurant spends” (yes, that’s the term they use)
  • 1x elsewhere

Cardless Privilege Club Signature

This is also an all time high (and all time low) sign-up bonus (affiliate link free application):

  • 20,000 Avios after one transaction
  • 20,000 Avois after spending $3,000 in 90 days
  • 10,000 Avios if you apply by June 4
  • $99 annual fee

Ongoing spend:

  • 4x on Qatar
  • 2x on “restaurant spends” (yes, they kept it the same the second time)
  • 1x elsewhere

Bonuses on Old Cards

Other Avios cards that aren’t issued by Cardless are joining the party too: Chase’s Avios cards have sign-up bonuses of 85,000 Avios after $5,000 spend in three months. All of these have had better offers in the 100,000 to 130,000 points range the past and will probably have better offers in the future though, so I see little to no reason to pay any attention.

MEAB Commentary

Remember, Chase Ultimate Rewards, Citi ThankYou Points, American Express Membership Rewards, and Capital One miles all transfer to at least one Avios partner, and Avios miles can mostly be transferred freely between all partners at Avios.com. That means that each of the sign-up bonuses mentioned above should be compared with an average sign-up bonus for flexible currency cards, like the Ink Preferred or Venture X Business card. That generally makes the Avios cards a bad deal.

There is a specific use case that changes everything though, especially if you have a way to manufacture “restaurant spends” with the Cardless Infinite card. Qatar’s status Qpoints are earned based on non-promotional Avios earning, not based on total spend. So, $500 in “restaurant spends” on the Infinite card will earn you 1,500 Avios and 2 QP, which means you can earn Gold status with 450 QP from spend and 150 QP from the sign-up bonus, all for only $112,500 in restaurant spends. UPDATE: I’m not sure how I missed it, but the Infinite card gives you Gold status in the first year without any need for restaurant spends. Thanks to Eric for letting me know.

Qatar Gold status will earn you oneworld Sapphire, which will get you access to AA lounges including Flagship lounges even on domestic flights, and it’ll get you into much nicer oneworld alliance member lounges too. You can also retain status with 270 QP in subsequent years, so you’ll only need $67,500 in restaurant spends to renew.

Good luck, and happy Wednesday friends!

The Qatar status program visualized (from /r/mildlyinteresting)

  1. American Express Membership Rewards has a 30% transfer bonus to Virgin Atlantic through the end of May. These are best for:

    – Delta One to and from Europe in business
    – Necker Island trips
    – Air New Zealand business to and from the US

    They have decent availability on their own metal for premium cabin space too, but fuel surcharges are high so it’s usually a more useful mental model to think about those as roughly the same price as a coach ticket plus some miles for business class redemptions.
  2. Express (unrelated to the American version; also both a clothing store and a former a medium tier gift card on the resale markets) has filed for bankruptcy. It’s time to think seriously about what to do with inventory you’re holding, and to reinforce that holding inventory carries risk. (Thanks to GCG)
  3. Virgin Australia flights are now bookable with Qatar Avios at attractive rates, especially for short and medium haul economy.
  4. Kent Brockman famously said that democracy doesn’t work, and reddit added a datapoint to that debate after I declared that US Bank is the most ghetto bank. According to the popular vote, the most ghetto banks in decreasing order are:

    – Citi
    – Bank of America
    – Barclays

    US Bank didn’t even make the top three. Why is Citi less ghetto than US Bank? Because pay by phone friends, pay by phone.

US Bank’s corporate landscaping signage presents additional evidence.

In January’s earnings call, American Express said they’d be refreshing 40 products in the coming year, and we’ve already seen some of that with the Delta and Hilton co-brand cards, each of which has new, coupon-book like credits. With new credits come new games:

Monthly Resy Credits

Delta’s Platinum and Reserve co-branded cards now have a have monthly Resy dining credit. In case you don’t want to actually eat at one of those restaurants this month just to save $10-$20, there are options:

  • Buying anything at a Resy restaurant will trigger the credit, whether it’s a gift card, tee-shirt, or stuffed animal
  • Many Resy restaurants are also on Toast, and Toast sells reloadable gift cards online which usually trigger the credit (Anecdotally there’s roughly a 3/4 success rate for whether this works for any random restaurant, but once you find that restaurant, it works consistently)

SideShowBob233 subliminally let me know that there’s a burger themed bath robe sold at some restaurants, so I guess you could look for that too.

Quarterly Hilton Credits

The Hilton Aspire Resort credit has always been slightly gameable, but only slightly. The Hilton Surpass and Hilton Business cards’ new quarterly credits are more gameable though: All the Aspire methods continue to work, but so does buying physical Hilton gift cards online. Note though that Hilton will silent cancel your orders if you do a bunch back-to-back, so treat it like a marathon, not a sprint.

Happy Wednesday!

SideShowBob233 also subliminally let me know about this bath robe, so I guess you’ve got options.

  1. Do this now: Register for your personalized United MilePlay offer. I got 7,400 bonus redeemable miles with a $650+ premium fare flight booked and flown by June 7.
  2. The Citi AA Business card has an elevated 75,000 mile sign-up bonus after $5,000 spend a single purchase, and the $99 annual fee is waived the first year. Note: I tried to strip off any tracking parameters from the offer, but it wouldn’t load when they’re stripped off. As usual, I’m not here to sell you credit cards and I won’t earn anything if you use this link.

    If you thread the needle through the terms and conditions and the sign-up bonus sticks around long enough, you can get it twice in just over three months, keeping in mind that business card approvals at Citi require 91 days between applications.
  3. Office Depot / OfficeMax stores have $15 off of $300 or more in Visa gift cards through Saturday. For best bang:

    – Even multiples of $300 typically offer bigger per card discounts
    – Try for multiple transactions back to back
    – Link your cards to Dosh
    – Don’t forget the American Express Business Gold $20 monthly credit
    – Look for lower fee Visas (currently, new cards are rolling out with a $7.95 activation fee)

    These are Pathward gift cards, so have a liquidation plan in place.
  4. You can make six credit card payments with your tax return or extension due today, which is a low friction way for manufactured spend provided you can float the money in case of any potential IRS holds. You get two payments each with PayUSATax [1.82%], Pay1040 [1.87%], and ACI Payments [1.98%]. The same game works with quarterly estimated taxes to scale this throughout the year.

    Usual disclaimer: I’m not a tax professional or an accountant, and you shouldn’t listen to my advice about anything, ever.
  5. Southwest has a promotion for 25% off base fares with promo code SAVE25NOW booked by this evening. There are blackout dates, and not all flights on non-blackout dates are included, but isn’t that what Wanna Get Away+ fares are for?

MEAB vibes.

Introduction

“The squeaky wheel gets the grease” plays a big part in the soft-skills needed to unlock huge velocity in manufactured spend, but it can also blind us. Today, I’d like to offer a corollary:

You tend to forget about the quiet wheels.

– Some lunatic who goes by MEAB. How do you even pronounce that?

The Squeaky Ones

Monday, Tuesday, and yesterday brought waves of PayPal shutdowns in the community, and just about every forum loosely related to manufactured spend is talking about it. We’re seeing shutdowns of:

  • Main accounts with big volume
  • Secondary accounts that share targets with shutdown main accounts
  • Secondary accounts that share names with shutdown main accounts
  • Newly created secondary accounts with even moderate volume

If you were affected, that sucks and I’m sorry. But on the flip side, what use is PayPal in 2024 for things other than manufactured spend anyway? I mean really, literally what use is it? Yes they own Venmo, but a PayPal shutdown doesn’t equal a Venmo shutdown.

The Not Squeaky Ones

There are plenty of users that aren’t shut down with PayPal yet, but that’s hard to see because they’re not jumping up and down in chat rooms and forums saying “I’m not shutdown, what do I do next?” because there’s no urgency. So, we end up hearing from a much larger proportion of squeaky wheels than silent ones.

We could leave it there, but a logical question then becomes:

What are the non-squeaky wheels doing, and what lessons can we learn from them about not being shutdown? There are a lot of answers to that question, and they probably hover around volume, dodging the ban hammer, the types of targets they choose, how often they use those targets, and the volume sent to those targets.

Bonus: Repercussions

One of my P2’s favorite manufactured spend jokes is to call the app that shouldn’t be named the floosie app (she calls all of its users floosies too, naturally). I know nothing about the current financial state of our collective floosie overlords, but I do know that mass PayPal shutdowns kill a popular liquidation channel for its users, and that means that they’re going to see a big drop-off in daily volume and probably daily profit in their ledger. Will it matter? I have no idea, but I’d suggest that now’s a good time to evaluate your risk profile for your floosie shenanigans.

Double Bonus: Brian M Brings us Back to Reality

Brian M, possibly the most cited contributor here, let me know that Southwest is opening its schedule for travel between October 3 and November 2 this morning. Booking early is a statistically better than average way to get the lowest fare possible on popular travel days with Southwest, though of course ymmv.

Next up: What about donut wheels?