Irrational Exuberance
Alan Greenspan once talked about rising stock prices as “irrational exuberance”. Much of that kind of excitement in the award points and miles world now is manufactured spend. But what seems like a new thing has roots many years old, and with it, some great and now nearly mythic people and stories to go along with it.
Pudding for Points
David Phillips, is a civil engineer who teaches at the University of California, Davis. In 1999 he noticed that Healthy Choice was having a promotion in the frozen entrées section of his local supermarket chain. The offer was for every 10 Healthy Choice product bar codes that a person sent in through the mail, he would be awarded 500 airline award miles, with a added incentive that stipulated redemptions within the first month deal would receive double those miles (or 1,000 miles).
David did some research to find the best purchase opportunity in the store carrying the products and eventually landed on…pudding. Single pudding canisters that sold for around $.25 each. He ended up purchasing over $3,000 in pudding, or over 12,000 canisters, but generating well over $100,000 of value in award miles – or around 1.25 million miles and permanent Gold status with American Airlines. But the story doesn’t stop there.
David still had to send in the bar codes in order to get credit and claims that his wife actually got blisters peeling so many labels off of the pudding canisters! So he called up and made a deal with a his Salvation Army store, asking for volunteers to peel bar code labels in return for the donation of all his purchased pudding. From his Salvation Army donation, David also earned a tax deduction of a little over $800. David hasn’t stopped points hunting, and is rumored to have still have award miles in the millions with various airlines.
The US Mint and $1 Coins
Then there’s Brad Wilson. In 2005, the US government issued the The Presidential $1 Coin Act that tried to get more dollar coins into circulation. That Act created a simple formula: The government sold dollar coins on it’s website to citizens at face value which to the lay person means that there were no extra charges, just a dollar coin available for a dollar charge. The big value adds in the deal was that shipping was free, AND the website accepted credit cards as a form of payment. So people ordered dollar coins en masse, paid with a credit card, had them shipped to their front door, then drove down to the bank and deposited them. The coins were never used and most of the time not even taken out of the packaging! A few days later after the charge for the coins posted to their account, these savvy points pros paid off the credit card charge for those coins with the money they just deposited – a no cost transaction.
Basically people could accrue miles on reward cards for purchases, sometimes amazingly large rewards, and incur no transaction costs. If done in a slightly different way and by adding a layer with cash back portals and Amex debit cards, you could actually earn miles and make a nice chunk of money! It was free miles and points (minus the minimal effort of hauling in hundreds, or thousands of dollar coins into your local bank!) and a truly an amazing time…for some!
US Mint dollar coin
Brad was one of the lucky people who capitalized on this deal. Wilson used the American Express Starwood card for his purchases, and accrued award points for every $1 he spent. He then transferred the points into his favorite airline’s frequent flyer program at a ratio of 1.25 miles per dollar spent. Or in other words, for every 800,000 points he put into his American Airlines (AA) frequent flyer account (AAdvantage), he was rewarded with 1 million miles (or a bonus of 200k miles). One million American Airlines (AA) miles was good for about 40 domestic round-trip flights, and earn more than 3 million miles from the Mint deal alone. It was truly an amazing time in the history of accruing points via manufactured spend.
Painted Points
I like the idea of flying for free for the rest of my life. Even better, I like the idea of my entire family flying for free for the rest of their life too! That’s the strategy employed by Chinese billionaire Liu Yiqian, who used his AMEX credit card to charge well over $200 million worth of art collectables in just the past two years.
Interestingly enough, Liu is a former taxi driver and street salesman who eventually made a fortune in stock trading, real estate and pharmaceuticals in the 1980s and 1990s. His reported net worth is approximately $1.5 billion. He and his wife have two museums in Shanghai that they display much of his purchased collectables.
In 2015, Liu paid $170.4 million for Amedeo Modigliani’s “Reclining Nude”painting at a Christie’s auction in November 2015. To add to that, reports say that he also charged a $45 million 15th-century silk hanging (also called a thangka) and a $36 million dollar tea cup from the Ming Dynasty in 2014 to his rewards card. AMEX hasn’t confirmed the purchases but has said that it’s possible to do based on the the individual client relationship.
For the purchases Liu used his American Express Centurion Card (also known as the AmEx “black card,”), an invitation-only card that is given only to AmEx’s biggest financial hitters. The Centurion card has no official credit limit, and it earns points too. It’s not clear whether Liu has a Chinese or US version of the card and if there is a difference in how points are accrued. But either way, he has racked up some serious miles. I once knew a guy here in the Midwest who had one of those cards, but now he’s broke and in jail! But I digress…
Just with these last couple of purchases, Liu has earned at least 200,000,000 AMEX Rewards points (or if the card is based in Chinese yan, approximately 28 million frequent flyer miles). Based on his extensive art collection and businesses, I’m guessing that there’s a good chance that he has earned at least double those amounts. Those point totals essentially mean unlimited first class tickets for life for Liu and his family, even in the swanky first class Singapore Airlines suite. Even if Liu used his points to pay for flights (which is a less efficient means of redemption), he could literally redeem those points for hundreds of first class flights around the world.
What’s interesting is that apparently he didn’t realize he was accumulating points from the transactions, according to his daughter Betty in an interview with Bloomberg. China only allows its citizens to transfer no more than $50,000 out of the country in any year, and by using his AMEX Centurion card, Liu has essentially circumvented that limit.
Necker Island
One of the coolest redemptions was a recent one by Gred Davis-Keane who runs the blog Frequent Miler at Boarding Area. He earned and then used 1.2 million Virgin Atlantic miles for a week’s stay at Richard Branson’s private island – Necker Island. Amazingly, it only took Greg around 7 months to accumulate 1.2 million Virgin Atlantic miles. The normal cost for a week on the island is over $30,000 US, and can be earned in a number of ways such as through charity, a flight on Virgin Galatic, or even through points. He blogged about his goal and the step by step path to reach it. There were a few other guests on the island too, but basically Greg and his wife had free reign. Paddle boarding, scuba diving, snorkeling, tennis, kite surfing and more, not to mention the company of Sir Richard Branson himself. Necker Island isn’t the most stunning island or destination in the world, but having a week at an exclusive, unique, and relaxing destination once again moved the needle to what is possible with award points and miles. You can read more about this epic redemption here. Well done Greg!!
The World Series
Another cool redemption that happened recently was Daniel Eleff, who runs the website Dansdeals.com, who redeemed 1,060,500 (SPG) Starpoints to throw out the first pitch at Game 7 of the World Series. The redemption was made possible through the SPG Moments program which gives members once-in a-lifetime experiences and VIP access to premiere sporting events, concerts, and much more. The fact that Dan actually had over a million SPG points is kind of amazing by itself, let alone the fact that he redeemed them for the opportunity to toss out one of the opening pitches in game 7 of the 2016 World Series.
Along with throwing out the opening pitch for game 7, Dan also received passes for 2 guests and his wife (normally just 1 guest, but he was allowed more), which gave to his father and brother. In addition to this story, Dan has also used SPG points to play softball at Wrigley Field, and stole second base at a regular season Cleveland Indian’s game. His list of points accomplishments before the World Series are substantial, but being part of game 7 is another level. You can read more about Dan’s World Series experience and passion for points and sport here.
Remember points are just for flights and hotels, they often present many more options that you didn’t think were possible.
Points + Miles = Places
Points + Miles = Travel
Points + Miles = Experiences
Manufactured Spend
There are a ton of stories around manufactured spend, usually at the highest levels, that are mind boggling. You think you might know numbers of what’s possible, then you hear and story that completely redefines what you thought was possible. Most of these stories won’t, and shouldn’t, get played via the loudspeaker that is the internet. But some occasionally do. A guy I know does a lot of manufactured spending. He purchases debit cards from a variety of places and is involved in a number of deals returning both points and cash. He’s really great with the math behind deals and has his return down to an exact science.
One one particular deal, large sums of money were returned to Visa debit cards (by accident) after the funds were actually used. That unusual reloading actually made him (and others like him) between $10,000-$20,000 in just a few days. Basically the stores and systems in the MS deal weren’t prepared for the transactions (amounts and/or volumes) that he and others threw at them and the tracking/organization got messed up. There are plenty of other MS stories that are shared in small groups that will never get aired publicly but are really quite amazing, especially considering that they usually take place in such short periods of time. It’s always interesting for me to learn about some of the pioneers who opened the door for others to travel much more than they normally wood.
