A few weeks ago I wrote about the firsthand experiences of people who lost hundreds of thousands of dollars swiping their cards for businesses.
DDF member chayal101 took it upon herself to spread the word by creating an ad that newspapers ran as a PSA:
2 weeks ago, I took part in a live panel discussion on the Zev Brenner radio show about one of the businesses that swiped several million dollars on people’s credit cards before going bust. You can listen to that interview here The lawyer for one of those businesses, Aaron Twersky, revealed that he’s involved with cases that exceed $50MM in similar credit card swiping schemes!
I also spoke with David Lichtenstein, the billionaire CEO of The Lightstone Group. That interview can be heard from 13:25-47:00 on his weekly Headlines Podcast here. We spoke about several credit card schemes including swiping and giving over your social security number, the need for financial literacy courses so that people can know how to avoid similar traps, and what my feelings are about selling miles. David also challenged my stance on writing about airfare price mistakes, which is something I write about often in “Rules of the Deal” posts. I also wrote about it 7 years ago in this Yated article after the $336 El Al tickets to Israel in 2012.
I’ve been writing this blog for nearly 15 years, but these were my first live interviews. I’d love to hear your thoughts in the comments!
Hey Dan, I’ve been under the proverbial rock all these years and am just starting to learn about this whole system of making money through opening credit cards and earning rewards, but I’m not interested in doing anything halachically or legally prohibited. Can you please clarify–are you saying it’s wrong/illegal to sell just miles or also the points from cash back cards? Thanks!
The R’ Chaim Brisker of “DEALS!”
Must have been your seventh grade Rebbe
I listened to both of them, nice job @Dan.
That guy really wanted to nail you, but suprisingly you stayed so calm, and answered appropriately…
Is that your way into getting all CSR on your side?.. lol
I enjoyed it very much, but was almost getting excited when he asked you for 1 good deal to share, I maxed the volume, but it didn’t come. Hmmm.
Maybe next time..
Great deals have a short lifespan. It’s silly to ask for one valid right now.
I could have responded to sign up for DansDeals alerts and you’ll never miss a good deal 🙂
A couple of years ago I came to shul as usual, and I met a yungerman didn’t seem to be too excited so I asked him whats happening?
He tels me: A few months ago I was learning אם כסף תלוה Rashi explains אם כסף תלוה – ר׳ ישמעאל אומר: כל ׳אם׳ ו׳אם׳ שבתורה רשות, חוץ משלשה, וזה אחד מהם. as he finished learning he walked out and someone approached him and asked if he could borrow a few thousand dollars, not thinking to much he lent that guy the money and now he crying on the loss there’s no way back.
I replied: you learned the sugya very good but there’s one word that slipped your mind it doesn’t say תתן it says תלוה if you cant make sure its a loan and not a gift have someone else do the due diligence.
Exactly
Very well explained @dan !! Staying on course and plating it in a very simple way. I think you did great
These buy groups are heimish nonsense. Use your credit card the right way and don’t look for a magic trick to get your bonus. The risks far outweigh the rewards in this case. Dan, thank you so much for posting this article; keep up the great work!
Great interview Dan.
One VERY important correction: You stated that there is nothing wrong legally lending money to a business via credit card.
This is absolutely incorrect.
The merchant is forbidden contractually (as a civil offense and possibly criminal offense) to swipe cards to borrow money.
I myself was victimized. However when I threatened the vendor with an FBI complaint they backed off and reversed the charges. They are all too eager to make a sale when NOT verifying the legitimacy of the cardholder. Additionally name the names, of the scammers. the one who stole from me, eventually victimized a well known electronics company for well over $300K. If allowed I will post his name, he fled to Israel, land of the indicted.
Just wondering Dan, I noticed that years ago you used to post great “hidden City” deals – of which I have personally flown on and very much enjoyed, and then at some point you just stopped cold and haven’t posted such a deal in years. Can you please provide an explanation? Has your opinion on the moral/ethic/Halachic side of it evolved in some way?
I still believe that airline charging fuel surcharges are unethical, just as hotels charging resort fees are unethical.
But there are risks involved and people don’t spend the time reading the full post to understand how to mitigate those risks. Additionally other people don’t like it when good hidden cities and fuel dumps are revealed.
Dan thanks for your website and all your work. Your posts about travel airlines etc. are all fascinating. However the posts about amazon items selling at a small discount to me are a bad idea. If the average person who checks the website daily to see these discount were to spend his time trying to improve his financial situation ie make another sale, improve his financial value to his employer etc.
the financial return would be way greater than the few dollars saved on a item
Let me know your thoughts.
The Amazon posts get more traffic than the mileage and travel posts.
People love a good deal and not everyone can maximize every second of their lives to make more money. Saving money on something they were going to buy or buying a deal in order to flip and profit off of it can make perfect sense.
You can make the same argument against clipping coupons. Clearly they’re not for everyone, but for many it makes perfect sense.
You have a point, however you have a huge platform and maybe as your website matures you should start posting articles about wholesome financial strategies. retirement saving, Ira, compound interest, high intrest savings. 15 yr mtg vs 30 yr mtg. Wedding plans.
So besides for helping people save money you will put them in a better position.
Keep up your great work
Those topics are out of my wheelhouse for the most part. I have opinions on them, but I’m hardly an expert.
Hi Dan – you can get some great guest bloggers on for that. Ask JJ to find you some experts!
along his life he bankrupted lot’s more money then all the ticket’s sold on dd thru price mistake so it look’s like the ganev became the shomer great for purim
Why is declaring bankruptcy the same as geneiva?
did not mean the word ganev just used an old good vort
if you something about how this bilonare’s do business you would know that a lot of that is only possible wen using all the lop holes in law and agreement’s to get rich on the back of the banks and private investor’s to but it simple they do not pay back loan’s even when they CAN AFFORD IT in order to get richer and rellie on the letter of law even it harm’s other people and that’s what we do with price mistake’s now come’s my first comment
I listed to the Lichtenstein podcast.
Your professionalism is refreshing but I do not fully agree that financial illiteracy is the main issue.
Sure there are the naive ones, but by and large people understand the risks. They simply believed the reward was worth the risk.
Money lending is not a new business. Unsecured loans are common within close communities. These transactions are similar to purchasing bonds (as opposed to shares) in a start-up. The fixed-rate of return here is roughly 2% (not great) and you are granted no equity.
You are effectively leveraging an asset you have – your ability to borrow – to earn a return. Investors do that all the time. There is always a risk you make a poor investment. The difference here is the unorthodox method.
If someone were to create a fund that acted as the middleman I think it would lessen the issues. They can solicit funds by means of asking people to lend money and earn points. They would then be responsible to lend to businesses. They can conduct due dillegence and back-stop defaults. The rate of return would go down as there are more parties to pay but it would significantly legitimize the industry.
The devil is in the details but clearly there is opportunity in this space.
The people that I spoke to simply didn’t realize the risks involved. They didn’t think someone that has been paying on time every month would ever stop paying and they thought they could just dispute the charge if by some chance they ever did stop paying.
I do believe that get rich quick schemes have so much traction in our community due to a combination of an expensive lifestyle and lack of financial literacy.
That doesn’t apply to everyone, but it does apply to many.
Dan,
Why are you against selling miles?
Airlines and banks can close down your account for selling miles as it is against the terms of their programs.
Use them as they’re intended and travel with them, or use a cash back card if you never travel.
you don’t think that its worth the risk vs reward?
My favorite part about miles has always been the aspirational aspect. I can fly and travel in a way that I otherwise would not be able to.
If that doesn’t appeal to you, then you would need to weigh the risks of selling, which can be very high with some programs, and you would want to ask your Rov for his opinion on selling miles against the terms of the program.
Or just use a 2% cashback card.
My issue with using points on international flights is that often the tax/fuel charge comes out to a ridiculous number. Im better off selling the points, booking on priceline, and pocketing the extra. Same “aspirational aspect”, just getting a better transfer rate on my points.
Is there a business card that will give me 2% cashback on 200k monthly?
https://www.dansdeals.com/go/SparkCashQS/
capital one has one I believe
With all the discussion, lets not forget that one of the greatest mitzvas is giving someone a loan. Why do you think there are so many halachos about not taking interest? Not only that, we arent even allowed to remind the other person that the loan is due in a way that would make him feel bad. All of this is telling us that its important to give a loan and not as important to get the money back.
At the end of the day, Hashem created ‘rich’ people and poor people. Rich means anyone who has something that someone else doesnt have. The ‘rich’ persons job is to help the poor person. Hashem runs the world. Hashem can always give you the money back in a different way.
We hear so many stories about the alter heim, where people would give their last dollars to help others. While we may not all be at the level to do this, and we may need to live more “according to the way of the world” and not give our last dollar, and be more “responsible”, nevertheless we should not forget the importance and great mitzvah of giving a loan. Even if it doesnt get paid back.
It’s not a loan if you don’t own.
If you treat it like a loan and the loaner can’t pay it back would you take responsibility?
Naarishkeit!
There’s no mitzvah to give out loans willy nilly without doing research into whether it can be paid back and without taking any collateral.
How much more so when you’re loaning money that you don’t even have and that you can’t afford to lose!
Did you read my last paragraph?
As I said, it is a great mitzvah to loan someone money (to help with a buisness, home, illness )etc. Even without a collateral. See this story from Likkutai Diburim: https://www.chabad.org/library/article_cdo/aid/2716872/jewish/Chapter-37-2.htm
However, although many of us are not at the level that we have enough bitachon to give a loan without collateral, yet we should still rememeber that giving a loan is a great mitzvah and in all the hubbub about these scams, people should rememeber this and not become scared and stop loaning all together.
Loaning money that a person doesnt have is a different story all together…
I’ve loaned plenty of money without a collateral. But that’s after doing due diligence.
Otherwise it goes into the tzedaka category. The difference should be obvious.
Did you read the story? Chapter 15. Its very interesting. A slightly different perespective.
Regardless, the main point of my original comment was a general encouragement of people to continue giving loans with the reminder that Hashem runs the world, Hashem is in charge of the money and Hashem doesnt remain a Baal Chiyuv. (And when it comes to Tzedaka, Hashem even says you can test me.)
(This obviously does not refer to situations where a person is loaning money for personal gain or when a person lends money they dont have)
You’re right on Dan! This is no loan.
+1!! No mitzvah at all!
Dan, you did a great job. Both interviews were excellent.
My hearth goes out to all the “victims” (if we can classify them as such… I BELIEVE a majority of them knew they were involved in a crooked scheme.)
However, as long as we don’t address the root cause these scams will happen again.
We can introduce financial literacy classes in Yeshivos from today till tomorrow and nothing will change. Financial literacy classes will help as long as it’s grounded in the reality and compatible with our lifestyle and education. No, we cannot expect young people to form a family with no basic financial means.
With that being said, some people are doing this ‘shtik’ out of desperation and others are doing it as a way to fulfill the get-rich mentality that is going around in our community.
Unfortunately, nothing will change because no real change is being made. You don’t have to be a prophet to predict this – more of this will happen. Is anyone familiar with the zeekrewards scandal that claimed so many victims in the chareidi community? It was only a few years ago, and here we are again…
@Dan Why is the lawyer disputing the common threat that some are saying, that if you go out in public I will definitely not pay you back, this is very commonly used even within our community what is it trying to hide?
Because such threats are illegal.
When a passenger makes a mistake, the airlines still charge you to change it cancel.
Why feel bad for airlines that make a mistake?
Great point!
Wow! You’re extremely brave for going on the David Lichtenstein show, he pushes people to no end and yet you stood your ground pretty tight. Impressive and brave. Nice work.
I listen to David on a regular basis and compared to others who he has pushed against the wall (i.e. everyone), i have to give you major kudos to holding your own. Your incredibly calm demeanor was/is outstanding. Keep up the great work you do!! Also i agree with David 100%, the mere fact that you have a Rav that you ask sheilos to, speaks volumes about you! keep it up!
To tell you the truth I had never heard of his show before. I guess if I knew that was his M.O. I would have been better prepared for it.
But thanks 🙂
Dan, who is “mo” (modern orthodox?)david lichtenstein?
He Is an alumnus of BMG and other chareidi yeshivas. his father was a chareidi rabbi, who learned his whole life. i don’t think he is “mo”
M.O. stands for modus operandi.
noun
A particular way or method of doing something, especially one that is characteristic or well-established.
Dan –
Thank you for bringing this to light. One thing that still concerns me is both long timers and many newbies are still actively involved in “buying groups”. They are purchasing items (they don’t want or need) and having those items sent to them and delivered to a buying group or even sent directly to the buying group’s warehouses and then are reimbursed for the purchases. I agree that the business model here isn’t a direct parallel but can you please post on your site your thoughts about the potential pitfalls and dangers of these transactions as well? I am confident that the operators of these groups are very well meaning but people need to understanding that the small 2% rewards they receive on their credit cards is not worth losing their houses or financial future if the operator of the buying group makes an improper business decision that causes his business to go south and they get caught holding the “hot potato”.
Personally I used a buying group only once to reach a signup bonus threshold which I could not have reached otherwise without manufactured spend. However I was very conscious not to charge any more money than I knew I had cash on hand that I could pay the bill as soon as it came due even if the buying group delayed in repayment. Yes I did get paid back in full but I was nervous the entire time… I see people using buying groups all the time for dollar for dollar manufactured spend and it truly baffles my mind.
Can you share your thoughts on this activity before it is too late?
-HSS
(PS – To all those owners/operators of buying groups I do not wish any harm to you, and I am not looking to shut down your business but at the same time people are giving you unsecured loans which are by nature very dangerous and they will be left with the financial burden not you if you default. Operating debt and capital risk should be carried by the business itself who is earning the profit not some innocent Kollel guy looking for manufactured spend. People must be educated.)
The same risks apply any time you hand over your card or goods. You might wind up holding a bad check or not getting paid if the business goes under or says they didn’t receive your items.
There are additional risks as well:
-The company can go after you like Google did: https://www.dansdeals.com/shopping-deals/google/dont-mess-with-the-google/
-The store can close your account
-The credit card company can close your card.
Are you willing to add this warning to your post on the main site? Many people still think that buying groups are not the same….
I noticed that it wasn’t discussed at all on either of the podcasts (I listened to both in full) which surprised me, because at least in my circles with DDF’ers it is still very prevalent and people still think it is safe.
Thank you.
I did mention it in the post:
https://www.dansdeals.com/credit-cards/dark-side-earning-credit-card-points-psa-dont-swipe-others/
And there was a lot of debate about it in the comments there.
Great interview, especially not allowing this lutkak to turn you into a רשע
But why give so much legitimacy to YAFFED
Why the hate?
I wrote the article in the Yated as a response to an article they published the week beforehand from a travel agent who called me out on violating ona’ah.
Not sure what I’m legitimizing.
Would’ve like to hear more about the legal matters involved in these credit card schemes. If there are any. And what happens to those who were effected by this.
Mazel tov on your jump from one broadcast medium to another!
Point manipulation is oftentimes borderline unethical, since they violate many cc’s terms of use. Other stuff is unethical, and some act straight out illegally. Many businesses are okay with leaving customers high and dry and simply declaring bankruptcy, as most customers are unsecured creditors, and such creditors are one of the lowest or last of the creditors to get paid back. An easy way to justify it!
Don’t get me wrong, Dan provides a tremendous benefit to the community in terms of notification of deals, flights, points on credit cards, but gaming the system via points/flights espouses and facilitates the impropriety we witness. Simply put, don’t put yourself in a position to get scammed. It’s not worth it.
You sound confused.
Earnings points via opening credit cards and maximizing those rewards on travel is perfectly legitimate. That doesn’t violate bank or airline terms, in fact they encourage and profit from that.
Credit schemes that people are falling prey to while risking hundreds of thousands of dollars and people giving over their social security numbers to card farmers is not normal financial behavior and should be called out.
Lumping those 2 things together is ignorant.
Not sure if this is what Shmuel meant, but CC companies don’t profit from people opening new cards and paying in full every month. Sure, they take a cut of every sale, but that, alone doesn’t justify their overhead + rewards. It benefits them because people are lured into opening lines of credit they can’t stay on top of and then they rake in the interest. Feeding the credit card culture can certainly be credited/blamed for rising debt (among people who otherwise would have been more cautious) and more frequent (or is it?) Incidence of impropriety
You too are conflating topics that have nothing to do with each other.
Banks are perfectly happy with people opening credit cards and paying them off in full. There is nothing wrong with that whatsoever. Full stop.
Poorly managing your credit is what I warn about in my credit card FAQ: https://www.dansdeals.com/credit-cards/building-credit-and-credit-card-faqs/
And in the first slide of the 18 seminars that I gave. If you are not going to pay your cards in full every month then don’t bother signing up for one, as you’ll wind up subsidizing this for everyone else.
Get rich quick schemes by loaning out your SSN or swiping for others is a completely different topic and one that has to do with a lack of financial literacy and knowledge of risk. You can blame that on me if you’d like to find a scapegoat, but I’m always the first to call out these schemes and call for schools to give financial literacy classes.
is there a way to download the zev brenenr for offline viewing? thank you
Great job Dan for standing up to Lichtenstein in regards to price mistakes on airline flights. He brought it up to attack you, which is apparent by continually asking about posting a price mistakes based on the old rule of the FAA even though that does not apply today!!
Also showing your strengths about you have a Rav (and that ‘wow’ in regards to your Rav saying it’s ok to post a price mistake was disgusting to say the least).
Kol Hakavod. Very Proud to be a fellow Lubavitcher!!
Man 2019 chassidus rocks! Dan is the pride of Lubavitch…
He was also surprised when I said that there was no ribbis issue when a bank gives miles, but the Rabbis after me both stated that of course it’s not a ribbis issue.
From listening to the whole show, he was probably hoping that I’d justify selling miles, but I don’t believe in that, so that was an easy argument to avoid getting into.
did you mention ‘ribbis’
. its says in דברים כג. לנכרי תשיך וגו’ .but for your brother not, followed by a blessing.perhaps the blessing goes upon the first part of the verse too!
Ribbis only applies when received from the lender. The end.
Just listened to the podcast. Dan, you couldn’t have been any more clear. You can’t compare an instant grocery purchase to an airline ticket transaction.
Great job!
Excellent job!
What do price mistakes have to do with credit card swiping schemes? Why did that even come up?
Because the one being interviewed about one topic is also an expert in the other related topic. Not too hard to make the leap.
hey liam, do you realize that if you spell your name backward you get junk mail? you can probly sue your parents for a load of $$$.
If you do, your parents will put you on their junk mail list.
It seems like Lichtenstein had you cornered. You agreed that you don’t know for sure everytime that the airlines purposely made it look like a price mistake, that the fact that there are always extra seats isn’t relevant, and at the time when you posted some of these deals, the FAA was not permitted to walk back the price.
In the end, you fell back on, “I asked my Rav and he said it’s OK, you should ask yours”.
In the final analysis, are you willing to agree that even if there is a way to finagle out Halachically according to your halachic advisor, it was still a morally questionable thing to do?
“In the end, you fell back on, “I asked my Rav and he said it’s OK, you should ask yours”.”
That’s not a “fall back”, that’s the normal way we do things. No different than a shailah in hilchos borer, for example. If Lichtenstein said it’s ossur, you’d say what were the deios lekan u’lekan, and then you’d say “but ask your rav what you should do at home.”
I don’t seem to see any difference between ”halachically” and “morally”
Presumably letter of the law vs. spirit of the law.
There is a lot of nuance to it, there is no way to give a clear cut answer to that question which is what he wanted. It’s easy to demand a yes or no answer, but those don’t always exist.
Anyone who says they can know with absolute certainty every time if an airfare is a price mistake or a publicity stunt is a liar.
But as I say in the rules of the deal posts that I linked to above,
“Is it right to take advantage of a glitch? Sometimes a glitch isn’t a glitch at all, but it’s created to generate publicity or profit (just ask Wideroe!). But I’m not your Rabbi, Priest, or ethicist. If you are uncomfortable with a price mistake, then don’t do it. Or ask someone who is one. I’m just here to provide the information and people can do with it what they want.”
C’mon…I’m an atheist and common decency says if you have to go and ask your rabbi, then you already know you shouldn’t be doing it.
Doug, You are admittedly an atheist, so it makes sense that you wouldn’t understand why people ask questions to a rabbi.
What I feel is easily understood, is the following: Orthodox Jews will ask a rabbi a question if they’re unsure of the answer. If I understood you correctly, atheists will do what they feel is right.
These 2 approaches are not comparable.
As an atheist who decides common decency?
“If you are uncomfortable with a price mistake, then don’t do it.”
Chayal101’s DDF profile indicates Male.
It was a Purim joke… 🙂
Chayal means soldier in hebrew
Except that it’s Chaya L, which is a she.
@Dan So Far I only listened to the david lichtenstein one you did an excellant job!! Thanx