Cheating the system

[leny]

Now I know that it's very wrong to even think about this and I would never consider doing it, but it's rather my curiosity.

Do credit card providers have measures in place to detect, what could be called points fraud?

For example, the Lotto Direct service in Golden Casket (lotteries) allows you to BPAY money into your account, from which funds can then be withdrawn by either cheque or EFT.

Therefore, people could rack up points by using BPAY to deposit the funds (which would be considered a purchase and accumulate points) and then withdraw and re-deposit the money into their credit card account. This is also a way for people to get cash advances without the higher interest rate and with interest free days.


Has there been a discussion on this, or does anyone have more info? It seems like a big loophole in the system to me.

 

[Evan]

A lot of 'deposits' like this are actually treated as a cash advance from a CC point of view. ie Interest from moment 0 and as such the points cost you interest.
Sometimes you can find a way of doing this, but generally not, any major loopholes are covered some way or another by fee's somewhere. Just as buying and refunding sometimes you can refund to a different card or cash and hence you get free points but mostly if it goes back into the same card the points you got are also taken back from you.

 

[NM]

A lot of 'deposits' like this are actually treated as a cash advance from a CC point of view. ie Interest from moment 0 and as such the points cost you interest.

I would be very surprised if such a BPay transaction was not treated as a Cash Advance by credit card providers. And most credit cards will also provide 0 points for cash advances as well as charging a fee or interest from the moment the cash advance is processed.

 

[oz_mark]

It certainly wouldn't work with a Westpac card, as points are not awarded on BPay transactions regardless of whether a purchase or cash advance.

 

[nowork]

I thought you had the choice to either bpay or transfer with credit card as two seperate things, but it does say they might appear as cash advance, if not then should get points?

 

[wallacej]

I thought you had the choice to either bpay or transfer with credit card as two seperate things, but it does say they might appear as cash advance, if not then should get points?

Using my cc to dep funds to my tatts acct is treated aas a cash advance and doesn't attract points, but it does attract interest charges.
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[leny]

So much like a credit card transaction, a BPAY transfer to a particular organisation can be treated as a cash advance as well?

 

[dede]

What about buying and exchanging foreign currencies through a company like Travelex? Are the fees too high to warrant bothering to do it?

 

[serfty]

... Are the fees too high to warrant bothering to do it?

Travelex charge 1½% fee for the use of credit/debit cards when purchasing online.

 

[NM]

BPay is just the conduit between the "biller" and the funding source. The biller gets to choose what type of funding sources they are willing to accept. If they choose to accept credit cards as the funding source, then a BPay transaction sourced from a credit card will be transacted as a credit card payment. If the biller chooses to only accept cash transfers not to accept credit cards (and hence not incur the CC transaction processing fee) you can still use a credit card as the funding source but the you will normally receive a warning that the transaction will be treated as a cash advance since the biller only accepts cash transfers.

Some credit card providers choose not to allow any BPAy transations to earn points, while some do allow points to be earned on BPay transactions that are processed as credit card transactions.

It is common for BPay billers that accept regular credit card payments (such as utilities) to also accept credit cards as the source of funds for BPay transactions. It is common for billers requiring cash deposits (such as paying off a credit card, betting accounts etc) or those offering BPay as a form of electronic funds transfer to avoid credit card transaction fees (such as Qantas) to no accept credit cards as the source of funds.

 

[Davo70]

Bottom line is credit cards can be quite different with the way they recognise transactions in terms of allocating points for their associated rewards programs. Some allocate points for BPAY w/ds, others don't. Some treat BPAY w/ds as cash advances - others treat as a purchase. A close check of the card and / or rewards program T&Cs should tell you what you need to know.

 

[leny]

I rang up ANZ, and again, I received possibly the stupidest response that could be received, and doesn't really help.

ANZ QFF card earns points per $1 spent with BPAY, same as with purchases. However, some BPAY transactions could be considered a cash advance, and it is not up to ANZ to decide.

I am sick of them saying "it is not up to ANZ to decide".

Is anyone with ANZ able to tell me how you find out for sure whether you are putting through a purchase or a cash advance when doing a particular BPAY transfer? Are you given the 'cash advance warning' as mentioned previously by NM?

 

[Mal]

Also remember that some batting/gambling/financial organisations only allow you to withdraw deposited funds once you have 'spent' that amount and made a profit.

Tab Queensland is like that. My betting account there accepts Credit Card deposits, but I can't withdraw the cash unless I've bet the same amount.

It's a weird system and possibly up to an operator to decide whether a withdrawal is allowed.

 

[serfty]

... I am sick of them saying "it is not up to ANZ to decide".

Is anyone with ANZ able to tell me how you find out for sure whether you are putting through a purchase or a cash advance when doing a particular BPAY transfer? Are you given the 'cash advance warning' as mentioned previously by NM?

Easy ... you do indeed get the 'cash advance' warning when BPAY'ing using ANZ internet banking. You then have the option to rethink.

 

[oz_mark]

I am sick of them saying "it is not up to ANZ to decide".

The biller determines whether or not they accept BPay payments from credit cards as a purchase. If they choose not to, then ANZ will process it as a cash advance.

Some banks (last time I tried Westpac was one), disallow the transaction altogether