When Discover’s Apple Pay promotion first appeared, it seemed too good to be true. Not only did Discover promise to give cardholders a 10% cash back bonus for Apple Pay purchases through the end of the year, but they also confirmed that the deal stacked with Discover’s Double Cash Back deal (currently limited to new cardholders).
Combined, the two deals make it possible to get 20% cash back from any store that accepts Apple Pay. Plus, you’ll earn whatever your Discover credit card earns anyway. With the Discover It Miles card, that means another 3% (1.5%, doubled). With the Discover It card, it means another 2% (1%, doubled) or, if your spend is at a Department store this quarter, you would get another 10% (5% doubled).
All of the above is still true, but early in the promotion Discover announced that gift card purchases do not qualify. We initially hoped that Discover wouldn’t really enforce that rule, but our hopes were soon dashed. Discover now flags every Apple Pay purchase that might have contained gift cards and puts the burden of proof on the consumer to show that they did not buy gift cards (See: Discover’s Deal of the Year results are in. The gift card rule IS being enforced).
There’s no question that the Discover Apple Pay deal is still a good deal for those with legitimate purchases. Without gift cards, though, it’s not easy to maximize the deal’s $10K spend per card allowance. In other words, the “Deal of the Year” is now merely a really good discount on in-person purchases.
Scheming for alternatives
Those who like to buy and sell merchandise must love this promotion. Sure, there’s an unfortunate need to keep track of receipts in order to prove that you didn’t buy gift cards, but the up-side is pretty big. It’s not unusual for people to find items on sale that they can resell at a profit. In those situations, the Discover Apple Pay deal combined with the Double Cash Back deal can increase profits considerably.
While I’ve dabbled in reselling recently, it’s not something I really enjoy doing. So, instead, I’ve racked my brain to come up with alternatives. Since I have two Discover cards (Discover It and Discover It Miles) I could buy $500 Visa gift cards from a store that lets me split tender. I could ask the cashier to enter in strange dollar amounts like $273.16 and $231.79. Then, maybe these purchases will escape the notice of Discover’s gift card sniffing employees. But… people have reported having purchases (real purchases, not gift cards) totaling just over $100 flagged as gift card purchases. Chances are very good that these purchases would be flagged too. And, since the receipts would clearly show the gift card purchases, I’d be out of luck.
Other ideas I’ve considered involve buying and returning items. The general idea would be to buy items with Apple Pay and return them in a way that refunds to something other than my Discover card. The beauty of such approaches is that I would have receipts in-hand showing actual purchases. But…. but…. but… All of these options cross my line.
Using as intended
If you haven’t read my old post, Drawing the line, please take a couple of minutes to do so. In that post I asserted that schemes involving buying and returning merchandise cross an ethical line… for me. If you’re OK with buying and returning, then you may be able to find a way to maximize the Apple Pay deal. Personally, I’m not going to do it, but I won’t judge harshly anyone who does. I have no doubt that many things I do are far across ethical lines for some.
So, personally, I think I’ll give this “Deal of the Year” a pass. Sure, I’ll take advantage of the deal anytime I can use Apple Pay for purchases I actually need. But, I don’t plan to go out and buy unneeded things (gift cards or not). Just as there’s nothing wrong with passing on other great deals (price mistakes, huge credit card bonuses, checking bonuses, etc.), there’s nothing wrong with going easy on this one. For once in my blogging life I plan to “use as intended”.
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Discover just sent an email sending me more cash from this Promotion! On May 4, 2017
Thank you for enrolling on September 20, 2015 in our promotional offer of 10% Cashback Bonus® on up to $10,000 in Discover® card purchases made with Discover card in Apple Pay from September 16, 2015 to December 31, 2015. Based on an internal review, we have decided to award you additional Cashback Bonus related to this promotion. It will appear on your statement within the next two billing cycles.
Thank you for choosing Discover and enjoy your Cashback Bonus.
Sincerely,
Discover Card Customer Service
Yep, I got it too (and so did many others). It’s awesome that Discover wants to give us more money!
Buying something and returning it costs the store money in time and resources. If a store is paying a sales associate $14/hr to process your return, inspect it, sort it, and return it to the shelf, you are costing them time and money.
Can I use Apple Pay at Apple Store ? Any success with that
I can use Apple Pay to pay att bill on kiosk at att stroe. I haven’t received the 10% bonus. Can someone confirm it is elligible for the 10%?
[…] How to cheat Discover’s Deal of the Year… Or not by Frequent Miler. I’m not really big on reselling, but when you’re getting a 20% discount it gets quite a lot easier, that’s how I’ve done the majority of my limit after gift card reselling/unloading was ruled out. […]
I’ve applied for more cards than I can count from your site over the years and posting about “buying and returning” crosses a line.
Love you man, but I’m taking my credit card referrals elsewhere from now on.
I don’t understand why that would be your reaction to a post explaining that buy and return is across the line for me, but do whatever you need to do.
Sheesh, some people really need to take a deep breath and read vs react.
I don’t want to speak for CleY01 but they could simply be offended that FM would even mention the idea as it’s so unethical. Now some people that would never think of that “idea” might try it. CTP mentioned an even more unethical idea (which he like FM chose not to do) in his post but I don’t think he has nearly as many readers as FM.
IMO, that’s flawed logic. If that is true, than any sort of mainstream media that publicizes the bad things people do from American Greed to Underworld Inc are actually encouraging bad behavior in society. And those shows get detailed, even describing ways that crooks evaded law enforcement. These unscrupulous methods alluded to by bloggers are quite obvious in a general sense. It’s not like there was a play by play with circles and arrows on how to pull it off followed by a PSA “But don’t do this”. I believe it’s better to shed a light on things in the dark rather than pretend like they don’t exist. I believe it encourages more people to make the right choice when confronted with the slippery slope scenarios that frequent MS. A cynical part of me wonders if maybe these responses are actually from people perpetrating these exploits that are upset they’re being exposed.
Just so we’re clear I’m not saying I was offended that FM posted it. I was simply speculating that the other person may be instead of “not being able read” like you said. I agree with you that ethical people are NOT going to do the things that FM mentioned just because he brought it up. I was more referring to low class people that might. In my opinion, doing that “idea” is basically stealing money from Discover’s coffers. They might as well just rob a bank (they probably won’t only because of fear of going to jail). Some people might find buying gc with AP unethical. I don’t feel that way though. There is nothing in the terms that say you can’t buy gc with AP only that it doesn’t receive 10%. Lying to Discover about the purchases or doing what CTP mentioned near the end of his article is unethical and possibly even illegal (fraud).
I’ve been thinking about this more. Are we saying that buying something on a credit care and “opting” for store credit is ethically reprehensible? Why? Who loses here? The store keeps your money. The bank keeps the swipe fees. Just because Discover and this Apple Pay offer is particularly rich doesn’t change what would otherwise be a victim-less crime if you were to even label it as such. If this is so unacceptable, why would stores allow you to return to store credit when they have your payment info? And if Discover didn’t want people to maximize it through a normal and perfectly acceptable purchase/return process through a store handling Apple Pay like any other payment method, they shouldn’t have offered it. I also can’t get on board with worrying for their profitability out of good will given their uncalled for malevolence towards consumers with otherwise legitimate large purchases. Finally, reselling is essentially the same here folks. The only thing I truly do not find acceptable that has been discussed is returning to another credit card. That ultimately does negatively impact a store as they will not receive the same amount of swipe fees returned.
In my opinion buying something with the sole intention of returning it is “ethically reprehensible”. That is considered “return fraud”. It’s not clear if that is actually illegal or simply frowned upon. I guess that FM and I are in the minority here as no one else has chimed in. In this instance you aren’t screwing over the store as you will eventually use that credit. You are screwing over Discover. I’m not sure what your problem with Discover is. They have usually been quite fair to me and offer very nice promos (some would say too nice like this one). How do you consider reselling the same?
Regardless of intent, I don’t think returning a product quickly, unused, and immediate resell-able condition is return fraud. Nor would it be frowned upon by said store especially if you get store credit in return. They keep your money and get a brand new product to put back on the shelves. Additionally, the banks keep their swipe fees. The only losers are banks offering some crazy promo bonus they never actually intended to honor. Let me put it this way, so far I have racked up about 13k in real spend on discover. They have flagged everything in the first week and there were zero gift cards. The amounts were completely random, albeit large. Discover is pulling out the hoops for everyone to jump through knowing they will pay out substantially less. Now THAT is fraudulent behavior in my opinion. They are LYING about gift cards being on my purchase. They are just flagging everything. My opinion of Discover was quite high before this whole deal and now I am seething with contempt as I scan receipts one by one because of their ignorant disregard for my time being of any value during the holidays no less.
And FYI reselling hurts retailers because you suck up their inventory and crowd out normal consumers they are trying to attract with promotional pricing and up-selling. You are also still taking advantage of the promotional rates offered by banks with an obvious intent to convert what you purchase into cash.
If you want to be black and white about it, shift all your spending onto the card. You’ll be in for a rude surprise when they accuse your $142.09 grocery purchase at Meijer of having a gift card. Hope you keep all those receipts and have a fairly fast scanner along with plenty of free time.
You neglected to mention the fact that you purchased $10K in gc near the beginning of this AP promo. Don’t you think that had something to do with them flagging all of your subsequent purchases? I don’t know if you read SD but you should see some of the shady crap some of those people are doing in order to steal money from Discover. Do you condone all of those things too? Below is the definition of return fraud. What you are doing (or at least defending) is the last sentence.
“Return fraud is the act of defrauding a retail store via the return process. There are various ways in which this crime is committed. For example, the offender may return stolen merchandise to secure cash, or steal receipts and/or receipt tape to enable a falsified return. Return abuse is a form of “friendly fraud” where someone purchases products without intending to keep them.”
Source: https://en.wikipedia.org/wiki/Return_fraud
What about my wife or sister that made a handful of large purchases that 66% were flagged? They are normal spenders. If they weren’t made aware by someone like me of what this whole fiasco was going on, it likely would have slipped right past them and Discover would have kept them ignorant until it was too late. So its nothing to do with a history like mine that you highlighted. Discover likely has a huge cheap off-shore team manually reviewing and flagging transactions it thinks are contestable and that group simply doesn’t care to flag everything large to justify their existence which is cost savings. Like every big bank, Discover doesn’t care to put the burden on the consumer when it suits them. And therefore I don’t see an issue when others profit from exploiting their schemes when it suits them. Call it two wrongs, but it seems right to me.
Return “abuse” can be defined as whatever you want. You could say it’s abusive to return something expensive that you opened but took issue with how it works even if “by design”. I’d say for it to be abuse, you’d have to show a clear victim of the said abuse. In the case of returning unopened stuff for store credit, no one loses anymore than if the merchandise was kept or resold. Friendly fraud… now there’s a funny made up term. It’s like all the big box stores got together and said, “now let’s make something sound illegal and wrong that is really just frowned upon because it eats into our bottom line.” I worked in electronics retail for a few years when I was younger, mostly behind the CS counter. The real fraudsters are people trying to return bricks in boxes, unpaid items off the store shelves, or trying to expensive yank parts or pieces. They always want cash back and operate at scale. The true abusers are people that “wardrobe” or use items and return them only to buy them again when they want to use them again. In the end, almost all these open boxes are sent off to a warehouse and sold bulk for next to nothing, whether an undetected brick was in there or something mint condition that’s perfectly repackaged. It’s no wonder big retail throws around the word “fraud” and “abuse” so casually.
You are correct that it’s not right that your family (and many others) had to send in their receipts when they had legit purchases. I read that Discover offered $20 to some people for the trouble. Did they not offer that to them? Did you end up maximizing the offer? What you described at the end is actual criminal behavior. I’m guessing most of the people on SD don’t even stoop to that level.
Thanks for the thoughtful post, parkerthon. I hadn’t fully put it together in my mind until this, but it seems like people are almost assuming that the return would go to a different credit card. Otherwise, what’s the issue really? A slight extension on a lucrative deal, maybe. Aside from the grocery stores I shop at, there aren’t many places that take apple pay that I really care to have that kind of credit at. I’m sure other folks feel differently and they’ll find their own lines. Anyway, thanks…
You are correct, Eric, people intentionally deceiving by returning things either unpurchased or incomplete is outright illegal fraud. The store I was at managed to bust one guy when he had the balls to try it more than once. Pressed charges too. The idiot was apparently part of a criminal ring and had pulled the same crap at multiple store in the areas, also wanted for shoplifting.These are the people that cause real economic damage and what retail is generally most worried about. Fickle consumers with misleading intentions of not actually keeping what they buy, not so much.
I was considering buying a $200 item at a store that accepts apple pay, so that I could return it for store credit to use during 2016. But then I caught myself, so I got out my horse hair shirt and flail to set my mind straight.
So over $100….so i could buy a buncha whole foods gift cards at $50 a pop I guess….
Nice post. I completely agree with you and I follow the same philosophy and have the same “line”. It was responsible of you to highlight this via a post so that others on the edge have a direction.
A couple of ideas for legitimate spend. Cell phone bills – I am going to try and pay off my installment plans on my Verizon phones, also prepay my bill, although the readers were not working at my local Verizon store. Also – The Disney Store takes Apple Pay and sells Disneyworld/Disneyland tickets – this is a great way to save substantial money on tickets and hedge against the yearly increases. We got to DW every year or 2 so I can just bank the tix.
Does this mean you’re *finally* over this boring topic? Thank god if so.
I recently purchased all my stamps for Christmas cards at Meijer with Apple Pay. I hope Discover doesn’t put up a fuss about the cashback.
There are two lessons here:
1) for Discover – THINK through your promotions before you go all press releasy.
2) for MSers – If it sounds too good for the CC company to honor its initial terms, expect the terms to be changed and act accordingly.
Mr and Mrs Buzz Kill who run Discover and Sears are giving a Harvard School of Business textbook example on how to use an initially great marketing idea and turn it into a promotion that loses customers. But a brilliant example of creating the nickle and dime emotion!
I don’t have a problem with enforcing the promotion terms, I do have a problem producing receipts for grocery store visits 1.5 months later claiming there was a GC purchase when there was no such thing. Same with all large purchases. Beyond idiotic. My feelings went from “wow discover is an awesome credit card company I should use more” to “wow discover really doesn’t care to screw the consumer when it conveniences them”.
I love all the hacking and borderline? abuse of the discover card and all the denials. A smile on a dreary day.
Have you seen any purchases at trader joes or sprouts questioned? They only sell gift cards to their own stores and you can buy in any amount, meaning you could just add a 100 GC to each regular purchase and it probably wouldn’t look too suspicious. My wife regularly spends over 100 on groceries a week, so if discover asks for receipts, I’m screwed anyways.