Discover’s Holiday Promotion Has A $100 Loophole

As part of the Discover Mall Holiday promotion, they are offering $20 for each $200 spent. However, there was no mention of what would happen if you returned the items after you “spent” the money. Since credit card companies are usually masters of the fine print, I figured they had some sort of mechanism in place to prevent this. Nope.

As posted by commenter Chris and confirmed by the five $20 gift cards that you see on my desk right now, there appears to be nothing to prevent you from simply returning the items and keeping the gift cards. I must note that while I bought the items initially at a participating mall, I returned my items at another branch at another mall that I went to later that day after finding it cheaper elsewhere.

In summary:

1. Go to a participating mall.
2. Buy $1000 worth of goods from a national retailer with a good return policy.
3. Get $100 in free gift cards from the mall.
4. Return the item at the same store (or another store at a non-participating mall to be less conspicuous).
5. Keep the $100.

The only catch I can find is that this offer is good only until supplies last, and they could run out of gift cards. They will stamp your receipt, but that’s just to make sure that you don’t get multiple gift cards for the same purchase.

This joins the credit card party of $100 in free gas for a trial and $100 in free gift cards from credit card signups.


  1. haha…i had the same idea in mind. I was just about to do beat me to the punch… classic hustling Jonathan..jk..You should also mention that you must buy 5 -$200 total for each receipt. Best retailer is Sears to do this. Lets hope Discover has no way of tracking you back, or they might just “cancel” your credit card.

  2. Innocent Onlooker says:

    That is a killing!

  3. Most of your tips I like, but this one feels like stealing. It’s one thing to take a 0% balance transfer and pay it off before the period is up – they may HOPE and expect you to eventually pay some interest, but nothing says you have to. “Purchases” seems clear to me, and if you make the returns, you haven’t made the purchase.

  4. Yeah I was thinking about doing this too! 🙂

  5. The Pin Man says:

    heh heh… You are right about that Jonathan. You know what else, last year there was no limit on the number of gift cards you could get.

  6. Hustler – At my mall, if you had $400 they’d give you 2 gift cards (and I assume $1000 = 5 cards). No need for multiple receipts. I returned some of the items when I found them cheaper at the 2nd mall, and I don’t see what’s unexpected about that since it’s holiday shopping.

    Tim – I knew this would be a controversial post. The main ethical dilemma for me is should I drive all the way back to the first participating mall to give back $40 in gift cards? I said no.

    As for doing it just for the $100? People are welcome to debate. However, I’ve found that people usually end up doing what’s right for their own karmic balance.

  7. Nony-mouse says:

    Ethics is ALWAYS a debate!

    What may be ethical to you certainly might not be ethical to others. So people should never preach ethics. Just like religion. I hate it when corporations make employees take ethics training and the next thing you know your CEO or some CFO is charged from some ethical issues!!!

    If you find $100, do you pick up the money and go to the nearest police station? donate it to charity? buy the PS2 u always wanted?
    So what is ethical?

    Going to War in Iraq… Was that ethical? Is war in general ethical?
    Is killing another human being ethical?

    As a civilian, If I killed someone in the US, i might be sentenced to death……but if I killed Bin-Laden today, I would be a national hero and I will be awarded $25 million buckeroos…….

    So what is ethics my friend? If you were buying soda out of a machine, and 2 cans pop out… you try to return the extra can to the store?

  8. SavingEverything says:

    Jonathan: You gotta thank me for my original post from November 6th, 2006 at 9:44 pm post; since i suggested what you suggest in the summary of this blogpost. Of course, based on my post, no one answered the question of what the mall Customer Service Desk does…. do they enter/scan any info from your receipt into a computer? do they enter or swipe Discover card into computer? How will this prevent you from repeating this the next day or next week or at another participating mall? Also, what are the stipulations of the gift cards? Do they expire? Do they lose any value, after a certain time period?

    Regarding Tim’s concern: from what i heard, which idont know is true, is that when you return an item to a store, that store does not get their merchant processing fees refunded to them (so the retailer/store loses out on their merchant fees, usually around 1.5% of the purchase price.) So, true, it is “like stealing” and hurting the retailer. But, if it’s a chain, well, they have the money. Plus, this is like the BT offer: it’s getting free money from either DiscoverCard or both Discover and the participating malls (i dont know who is paying for the giftcards.) The advantage of this: no hassles of doing the BT offer and constantly being diligent in payments for the BT offer period, and no credit applications needed (unless you need to get the Discover). Plus, it might be taxfree versus your savings interest on a BT money. Disadvantage: you have to use it at a store in participating store; you have to return the items you bought; you may not live near participating mall, and may not be worth it.

  9. Quick question, how do you pick up these reward cards? At the mall costumer service?

  10. Jonathan – I don’t have a problem if returns are made because you get a better deal elsewhere, or it doesn’t fit, or any of a thousand other reasons returns are made every day. I have a problem, though, if someone buys stuff which they only intend to return after getting the “free” money. I put “free” in quotes because there really is no such thing – somebody pays for that, that somebody being all the rest of use who legitimately shop at these stores. Just like shoplifting (hey, check out the loophole at my local store, they don’t search people when they leave to make sure they didn’t take anything they didn’t pay for, so just stick stuff in your pocket and take it!), we all pay more for our goods because of the unethical behavior of those who take advantage. And if your only ethical delemma is whether to make the trip to return the cards, I can solve that one easily for you – just don’t use the cards.

    Nony-mouse – while some things might be debatable as to their ethical status, others are quite clearly one or the other. Not to say this is one of those things, just that relativism is, itself, relative.

    SavingEverything – it is most certainly NOT like the BT thing. When I take money in a balance transfer and put in the the bank, I am fulfilling my agreement on both ends exactly as stated – the credit card company puts no restrictions on how I use the money I borrow from them, only that I pay them back according to the agreed upon terms. I am taking nothing away from them that they have not freely offered. Not true with this Discovercard promotion. If you buy items with the purpose to return them and pocket the gift card, you are not meeting the expectations of the promotion. That Discovercard didn’t create some convoluted and troublesome method of doing this promotion in order to keep people honest does not change that fact.

    I think it would be a shame if people used this method. Besides any ethical questions, the practical matter is if too many people trick the system, things like this won’t be done in the future. Then we all lose.

  11. Chelseafan says:

    “But, if it?s a chain, well, they have the money.”…..what kind of reasoning is that ? Just because ‘the chain’ has money, it does not give you the right to scam them. Thats just plain hustling. Do not seek to justify it.

  12. Tim,

    Have you ever took advantage of the 0% apr? if yes,
    then i guess you are stealing from the people who pays the interest on their monthly balance since CC company rely on that to make a profit and will hike the rate for the regular people.

    Have you ever pay cash to someone to work on a service? if yes, then you commit tax fraud since you don’t pay tax on the service and the person you paid probably didn’t report that on your income tax.

    Have you ever sell something on Ebay, or profit from some way as a side income and didn’t fully report that on your income tax? if yes, then you are stealing from the rest of us where we all pay our taxes.

    Have you ever tip a waitress by cash? if yes, then you probably helping that person report less income on their taxes.

    Have you ever burn a song or movie on a cd? if yes, then you are stealing intellectual property.

    i can go on and on and on… is my motto…”as long as it is legal..whatever you do it between you and your God”

    Personally, a credit card company that charges 21% apr to ignorant consumers is both immoral and unethical..but who am i to judge? they doing it legally….you got a problem with that, take that up with your politicians.

  13. I read your blog posts every day, and a lot of them have great ideas, tips and tricks so I definitely appreciate everything you’re doing. But, I do feel like this one, or any kind of thing like this is just plain stealing. Maybe not illegal, but I do feel like morally it is wrong. On the other hand, you think of the hundreds of thousands of people who are paying 20% daily accruing interest on their various credit card debt, who can’t escape the vicious debt cycle. So maybe the credit card companies deserved to get scammed a little in return. 🙂

  14. Ethics? LOL – just sent in my $100 in gas for signing up for citi’s credit protector. I plan to cancel before being charged. KARMA

  15. I don’t think that “a credit card company that charges 21% apr to ignorant consumers is both immoral and unethical”. The consumers who get such crazy interest rates are incredibly risky; this risk must be compensated by an adequate return or those consumers would not get credit.

    Personally, some of them shouldn’t. A friend of mine is paying 18% on a car loan because her credit is just that bad…late payments, missed payments, accounts in collections that are STILL late, and she’s even had her power turned off a few times. I wouldn’t lend to her even with a 30% return.

    If it weren’t for risk-based lending, we’d all be paying 15% or more for credit cards, with the low-risk consumers being penalized for the faults of the high-risk ones.

  16. hustlermoneyblog – do I take advantage of the 0% apr? On my regular credit card, I pay the balance each month before the due date, and thus have use of the money all month interest free; when I get the 0% offers, I take the transfer and deposit it in the bank, paying off the balance before the 0% interest expires. Why is this okay? Because it is EXACTLY the terms that the credit card company has offered me, freely and of their own accord. It is the transaction that they and I have agreed to – I can’t see how this can in any way be construed as “stealing” from anyone, particularly people who aren’t even involved in the transaction in the first place (those people you mention who choose to accept other parts of the offer by NOT paying things off and paying the agreed interest rate).

    Paying cash to anyone – it is not my job to police whether those I pay for goods or services follow the laws and pay their taxes, that is up to them. If =I= am paid cash, I report that income, yes.

    Now, I don’t want you to think I’m some sort of goodie-two-shoes who never does anything wrong, I have. Just to use one of your examples, I have on occasion downloaded songs, technically illegally. But even then, I try to do so in what I consider an ethical fashion – I only download items that I have already purchased in some fashion at least once (LP, cassette), one-hit wonders from my youth (I’m 44) which weren’t easily available otherwise, or songs from albums that sounded interesting in order to decide if I liked it (if I did, I’d buy the CD, if not I’d delete).

    But to me, this method of “buy only to return” is no ethical gray area, it is clearly cheating someone.

    Oh, and I also agree with Chelseafan, stealing from the rich is still stealing.

  17. Do you know why they lowered the minimum payments on credit cards years back? No, it’s not because they’re nice, but because they knew they people were gullible enough to fall for it and be indebted for life.

    Or how about when I had a perfect credit payment history and was late by 2 days and was charged $30 in various finance and late fees. (Thanks Bank of America, never used you again.) After all, they were just following their own policies without taking into account my relationship with them.

    It’s their policy. They screwed up. They take every opportunity to profit from their customers. Why is it wrong for you to take every opportunity to legally profit from them? It’s not.

  18. John Franks says:

    Like some of the other commenters, I find this a little too shady. In my mind it’s in the same category as returning an item to Costco after having used it for six months. Can it be done? Sure. Is it wrong? Everyone has to decide for themselves.

  19. For the most part I’m with Tim in this conversation. I also happen to think that Jonathan is pushing the envelope a little too hard in his long time, ingenious efforts to squeeze funds from the credit card issuers. OK, none of them is Mr. Nice Guy. Their late-payment fees are outrageous, not to mention the exorbitant rates many of them still demand for purchases & cash advances — even when a card holder pays in full every month & has an exceptional credit rating. Still, they have to resent all those “screw you” schemes Jonathan works up so skilfully & seldom fails to advertise. One of these days one fears enraged creditors are going to bring the gravy train to a sudden, grinding halt.

  20. SavingEverything says:

    Chelseafan: i apologize of what i was saying. you’r right, it’s not a justification. I was just giving information why when people return things at stores, the people really hurt the stores… even though it is considered very small to the amount of money they make in selling their merchants.

    However, the way we get these gift cards is not a scam. We are following the rules and regulations of the offer. What I and Jonathan? and others are suggesting is that we are fulfilling the terms of this promotion to get the offer, the $20 giftcard per/ $200 in purchases. [similar to getting the 0%apr for 12 months: we get the money, 0%apr, we place the money in a hi-yielding savings deposit, and when the offer is over we return all of our original BT loan; thus fulfilling the offer; but keeping the interest on the loaned money in our savings account and paying taxes on the interest income.] True, the BT offers have no restrictions of where we use the money; here, the Discovercard and participating mall does not restrict how i fulfill the requirements of the offer, except that you cant use the same receipt more than once. But there’s loopsholes to that, as Jonathan has made in this post.

    Tim, you are probably right though, when you said “we all pay more for our goods because of the unethical behavior of those who take advantage”. As an example, there are no such deal as getting a 0%apr for 12 months WITH NO BT transaction fees with Bank of America (and all the formerly MBNA credit cards.) All their cards have the 3% BT transaction fee with $10min and no maximum. (the Motley Fool card is the only one, but the no bt transaction fee applies to balance tranfer amounts made on your credit card application; which means, based on your credit report, Bank of America can decide how much your transfer (and credit limit) is based on your credit report, which may or may not show that you’ are taking advantage of their “free” money.
    Rob– way the go! Go fulfill the requirements and terms to get the free gas offers, and cancel afterwards. That’s the spirit of this blog!!!

  21. Tim,

    I commend you for being an outstanding citizen of this great country U.S.A.

    Us poor folks have to join the “dark side” every now and then to get ahead.

    I wish i have daddy to set up a multi-millions trust fund for me so i can live on interest alone, so i don’t have to do these silly $25, $50 bonuses.

  22. Tim – I think that it is unethical for credit card companies to entice people to spend more than they can afford though clever marketing. Of all people to take advantage of, I relish the fact that I can stick it to the credit card companies.

    I had some roommates in college that took advantage of the Costco computer return policy and they got a free computer every 6 months. I do have a problem with that. I think that people like that are the leeches of society.

    I guess ethics don’t really apply to me for sticking it to credit card companies. Does that make me a bad person?

  23. Credit Card companies are the most unethical companies I know. They WILL take every opportunity to profit from you. A couple of years ago when we were struggling financially, these institutions weren’t good to us. 1 day late on a $10 minimum payment? $30 please. Oh since that $30 late payment charge pushed you over your limit, another $30 please. Take Capital One for example. I don’t have one their cards anymore, but I have heard of people going through this: You can have 2 or more Capital One cards, already late and over limit, they WILL send you even more pre-approved credit cards offers. They will not stop until they get every last penny in your name from you.

    So whenever I get the chance to profit from them I do, just for payback. Signup goodies, free money, 0% balance transfers, you name it, I am doing it. I’ve signed up for all kinds of stuff just to cancel the it as soons as I get my reward.

    I recently signed up for a Delta Skymiles just to get 15,000 bonus miles ($150 value), and will cancel it soon.

  24. Delta Skymiles Amex I meant to say.

  25. This will be my last post, I promise – especially since it looks like we boosted Jonathan over his bandwidth limits earlier today!

    Rob – I see no problem at all with your cancelling your credit protection after getting the $100 gas card. While it’s not what they were hoping for when they made you the offer, it is well within the terms being given. In your case (and mine), they made a gamble, and it didn’t pay off.

    Hustlermoneyblog – I don’t really know where your comment about daddy setting up a trust fund comes from, I’m hoping it was just a general comment having nothing to do with me, as you know nothing at all about me. Everything I have is from my own hard work and the foresight to marry a woman who has been highly successful herself . And if in order to get ahead you have to cheat and steal, you truly are poor.

    Jonathan and everyone else – I have been reading this blog for quite a while here, and have learned a number of good things. While not everything I’ve read has been something I’ve been interested in trying, I have never seen ANYTHING promoted here that I thought was the least bit unethical until this. It’s one thing to take full advantage of the offers being made (using interest free money to earn interest elsewhere, signing up for free trial periods with gifts and then cancelling when the free trial is over). This, I believe, goes well beyond that.

    Oh, and had this particular “loophole” had been presented in a different fashion, say if you only had $180 worth of stuff you wanted to buy and you bought an additional something for $20 which you later returned, I wouldn’t have had as much trouble with it. Splitting hairs, some may say…

  26. I’m sorry, but to say that taking advantage of 0% balance transfers is ok, but this isn’t, is totally hypocritical.

    In both cases the credit card companies are losing money. It’s the same exact thing. The gift cards are a cost. The interest free loan is an opportunity cost.

    Get over yourself.

  27. It was a general comment Tim…lets just move on..all these blabbing is an opportunity could be better spent on talking about making money, investing, savings, etc….

  28. Okay, I said it was my last comment, but I just couldn’t let it pass…

    Jay – sorry, but your argument just doesn’t hold water. The credit card company sent me a letter, telling me it would give me a new card and allow me to do a balance transfer with 0% interest for a given period of time. I just can’t see how doing exactly that is in any way the same as charging $200 on my Discover card in order to get the $20 bonus, then returning the items for a full refund – clearly NOT what the offer is.

    Saying they are the “same exact thing” just because the company loses money in either case is silly. By that theory, the guy who goes into a casino, puts $100 on black and red comes up is the “same exact thing” as the guy who gets mugged outside the casino and has $100 stolen from him.

  29. The offer is a balance transfer. What is a balance transfer? It’s a transfer of unsecured debt from one credit card to another.

    This, and the gift cards, are both within the legal terms. What you are claiming is that the gift card situation violates some unspoken agreement between you and the credit card company. I am saying the balance transfers are the same thing. They are not intended to be used for you to take out money and put it in a money market, just to hop to another credit card in 6 months.

    If you morally object to violating the intent with the gift cards, why do you not object to the balance transfer game, which is clearly not their intent.

  30. hahaha…lol…Tim, Jay…you guys are too funny…Jonathan, where u at? you started this whole mess…haha..I think Jonathan is tired of approving these messages…

  31. Crap crap crap. I had a post all written out but I just deleted it. What a bad blogging day.

  32. Tim is wrong. Jay is wrong. Hustler is wrong. Mike is wrong. SavingEverything, you seem to be Mr. Right. You’re wrong! (imho)
    I think this all comes down to…who wants to take advantage of a free deal, and who wants to take advantage of a free deal, freely. I think if you purchase things and get the giftcards, then you have completed the agreement in this free gift card offer. End of story. What you do afterwards is your business. If you take the free money from the 0% new credit cards for 12 months, then whatever you do with that money is your business. End of story. At the end of day, you are all right! Everyone is right! At the end of the day, it’s the credit card company that makes money off your purchases.

  33. Anybody questioning the ethics behind legally taking advantage of a loophole needs to watch the PBS Frontline program about the credit card industry. The credit card industry thrives by taking advantage of consumers. Excessive fees and the universal default clause that allows them to jack up interest rates for any reason. If you ever make a mistake playing the Balance Transfer game you’ll wish you had that 100 bucks from Discover.

  34. The fine analysts and lawyers at Morgan Stanley (Discover) didn’t just fall off the turnip truck yesterday. I’d assume they did a financial impact analysis for this promotion, and are quite aware of this possibility. I’m pretty sure that they don’t consider this the type of consumer behavior they’d want, but calculated that not enough people would take advantage of this loophole to make the promotion not worthwhile. I’ve got a Discover card, but I’m not going to go through the bother of doing this to get the gift cards.

    You’re not taking advantage of someone’s dotty old grandmother here. Morgan Stanley know exactly what their promotion does and does not allow you to do, and God knows that they can play hardball when they want to. You want the free gift cards? Go for it. Like the endless ads and junk mail, it’s another cost of doing business.

  35. Independent George says:

    I’m a little troubled by some of the comments here. I can understand how one could argue that this is ethically neutral – you are, after all, operating entirely within the terms of a contract. I think I disagree, but I can see both sides of it, and can respect the argument.

    On the other hand, I can’t understand how anyone could justify it by saying, essentially, ‘the credit card companies are crooks anyway,’ or, ‘the big retail chains have enough money’. The action itself is either right, or wrong, on its own. It doesn’t matter whether you’re a small, family-owned local bank/store, or a big retailer/bank.

  36. I did this yesterday Here’s how it went down:
    1. Purchased $1000 worth of stuff from the mall.
    2. Presented my receipts to customer service.
    3. They asked for the discover card which I used to buy the stuff, then they swiped it through a scanner connected to a PC.
    4. They then entered in the card numbers off of the 5 gift cards.
    5. They write the numbers of the cards down in a log and ask you to sign your name.

    That’s it. I haven’t gotten around to returning anything yet, but the only thing I would think they could possibly do is to charge each of the gift cards to you Discover account if you return the stuff you bought, since they have a record of what gift cards were given out to your account. I guess I will find out soon after I return the products.

  37. Alan Smithee says:

    That was an easy free $100. Thanks Jonathan. Now for my .02 —

    Ethically I have absolutely no problem with doing this. The terms of the agreement were laid out in black and white and I fulfilled them: purchase $1000 worth of goods on a DiscoverCard and receive $100 in giftcards. I made my purchase, claimed my giftcards… and returned the items. The bulk of this promotion is for the benefit of the mall. Its purpose is to get you in the door. In my case, I went into a mall that I would never ordinarily have driven to. I ended up spending quite a bit of time there and noticed several stores that I haven’t seen in other malls, ie. Apple store, so its safe to say I will be back. In this day of expensive advertising, $100 is a small price to pay for a mall to drive consumer traffic through their doors.

    Disagree? Is this any different that opening an ING account to get your free $25, then pulling all your money out and only using the account to collect referral money? It’s all about cheap advertising.

    Disagree? What about when DiscoverCard sends you a $15 check in the mail that when you cash enrolls you in payment protection? I don’t know about anyone else, but I gladly cash that check then wait a week and cancel my membership. DiscoverCard doesn’t seem to mind; they send me a new check like clockwork every two months!

    Back to the $100 question at hand, I consider this money part of the mall’s/DiscoverCard’s advertising budget. I went, scoped out the product (the mall) and collected my “payment.” Now the mall knows that I’ve been exposed to what they offer and may be back. Which I will. And I might even buy something next time. (For real.)

  38. Alan Smithee says:

    The wife just completed this “transaction” with her Discover Card as well. $200 in total. Brilliant.

  39. 1. Has anyone done the following: Do the cycle of collecting $200 in gift cards. Return the merchandise. Report your card lost or stolen. Get a new account number and do it over again?

    2. Has anyone returned a merchandise with a stamped receipt? What to say and will there be any objections? I will try to return $400 worth of goods in a few days. I feel a little uneasy about this but I am not going to lose $400.

    3. It turns out, it is not an easy task to spend $1000 in a mall so that it would be easy to return. Any suggestions ?


  1. […] Jonathan explains a loophole in the Discover holiday promotion at Mills malls where you can buy $200 of stuff on your Discover card, get the $20 gift card, and then return the stuff while keeping the $20 gift card. As a very vocal and ethical group (which is a great thing and evidenced in numerous posts in the past), I wanted to know what you all thought of this. Is it right? Would you do it? […]

  2. Blogging Away Debt » Blog Archive » Looking for Your Opinion - Making Money from Credit Card Offers says:

    […] Go take a look at the article here and come back. […]

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