I have written before about Costco’s incredible refund policy. One of the techniques that I have used in the past is to purchase diamond engagement rings at Costco online and return them at Costco stores. The Costco Online store accepts MasterCard and Visa credit cards in addition to American Express cards. Costco stores only accepts American Express cards. When one buys with a reward or 2% cash back earning MasterCard or Visa credit card all returns made to the Costco physical store
is issued to the Costco Member in either cash or check. The reason for this is that the physical stores do not accept MasterCard or Visa and do not have a method of returning the purchase to these credit cards.
This creates an arbitrage opportunity for a Costco member to purchase a high value item and return it to a physical store and earn miles or cash back based on the total purchase on a MasterCard or Visa credit card. Many people used this method to create frequent flyer miles or so called manufactured spend. The most recent purchases have been for diamond engagement rings, laptop computers and other small high value items. Costco attempted to intervene by changing their refund procedure to require diamonds greater than 1 carat to be send back to Costco Online offices to be returned on the credit card originally presented. Most people thought that this was the end and gave up on using Costco Online for manufactured spend. I was just not practical to purchase a $7,000 hot tub to return to a store location.
I challenge you to think outside of the box. There are many other items at Costco that are not diamonds, are small and easy to return. One example is shown below from the Costco.com website:
Utilizing this method with a credit card associated with American Airlines miles you would earn 1 mile per dollar spent. including the local sales tax. Using a United Airlines Club credit card that earns 1.5 miles per dollar spent you would earn a minimum of 46,500 United Airlines miles. Using a 2% cash back credit card you would earn about $620 in cash back. In addition you would most likely fulfill any minimum spend requirements.
I suggest that you do not do this
more than one or two times or your membership may be flagged to block future high value items. But there are ways around that too. You also have to have the credit limits to support this kind of spending and the stomach to tolerate the anxiety during shipping and the return procedure.
Have you ever done anything like this? Or does this “cross the line”?
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