A Re-Introduction to the Float Rule (Or: Another 3 Month Loan To Incomm)
Anyone who’s read Milenomics diligently know the following: Today’s post is half refresher, half tale of woe. If you’ve already read a ton about the Float rule here on Milenomics feel free to skip ahead to the Incomm story later in this post.
Cash is Real, Miles Are Not
The only thing that is real in the world of points and miles is cash.
Keep telling yourself that because losing focus on the “Capital T” Truth (DFW) of this means you may fall so far down the rabbit hole you do very real financial damage to yourself.
The Rule we use to keep this in mind here on Milenomics is the Float Rule. A simple rule really, it states:
“If tomorrow your ability to cash out purchases went away would you have serious issues with paying your credit card bill?”
If the answer is yes, slow down, and consider your options. In the past year we’ve seen many of these avenues close; be it Bluebird/Serve, Grocery store money orders, or any number of other cash out methods. Because nothing is guaranteed to be around forever the float rule is designed to make you consider the “what ifs” of holding instruments and having to actually use them.
Most blogs will say “don’t play this game if you can’t afford to pay off your credit card every month.” But that’s not enough really; there can be times when you will not earn your money back for weeks, or months. I once gave Incomm a 2 and a half month $7,000 loan. Don’t play this game with money you can’t realistically afford to tie up for 3-6 months. Fraud can lock your money up for 1-2 months, inept policies can hold it for even longer than that (more on this later in the post).
Consider the Usefulness of What You Buy
Do you have a second method to cash out your purchase? If not, you really should have one. The best analogy is jumping out of a plane with a backup parachute. A second method could be something as basic as simply using the financial instrument for your day to day shopping, or as complicated as using that card to buy something else that you then turn around and sell.
There have been times I’ve bought gift cards to small, regional stores because it was possible to sell them for a profit. I literally had no parachute for these purchases; if the resale market for these cards dried up. My closest store was 2,000 miles away, and I had no idea what I’d do with $2,000 worth of cards to a store that sells guns and ammo (restricted for resale).
Stop, and take a second to consider what your backup parachute is for all your purchases. I’m not saying that if you don’t have a second liquidation method to forego the purchase entirely, but you might consider scaling it back, and/or focusing on scaling up another production line.
Absolute Loss of Capital Absolutely Stinks
5,000 miles for a $1,000 purchase sounds like a great deal. But that’s only true if you somehow get the $1,000 (or a large portion of it) back somehow. When you trade $1,000 for 5,000 miles and can’t get your money back right away you’ve effectively paid 20 cents per mile.
Losing a card, or a Money order could wipe out months’ of work. Today I’ll talk about an ordeal I got myself into, and one that could result in the loss of over $1,000.
(I really want to stress that what follows is my fault, and not the fault of Incomm. I was properly warned. I had another option to liquidate that I disregarded, and so here we are:)
My foolish 3 month ordeal with Incomm
This one is all on me. I backed myself into a corner with Incomm and we’re at a point where we’re stalemated. Here’s some backstory:
-During mile madness a few years ago I discovered a way to refund some prepaid products. Doing so meant the purchase fee was also refunded.
-I may have taken this too far. Green dot specifically did not appreciate my methods, and sent me numerous letters about this fact.
-Incomm also told me I was to stop what I was doing. And so I did, for a very very long time.
-Recently Paypal told me that the *other* method I was using for cashing out my Prepaid cards needed to stop immediately.
I had no backup parachute, and I was confronted with a decision to make: Incomm said not to refund these anymore, and Paypal said not to load anymore to my paypal account. I debated what to do, which path would sting the least, and ultimately settled on the fact that a closed paypal account would not be ideal.
So I held my nose and sent message to Incomm: I wanted my money back. I knew this strategy was risky, but I felt it was the path of least resistance. I assumed I could deal with a human at Incomm easier than I could deal with one at Paypal. I also foolishly assumed that my refund would slide by unnoticed.
Needless to say, I’m on their naughty list, and the refund did not slide through unnoticed.
I’d put myself in a corner: Specifically told not to refund these, and yet asking for a refund which would invalidate the cards and mean that my fortune (literally) was in the hands of Incomm. And like any relationship that goes south, we began to argue about money.
Deactivated cards in hand, phone agents told me that they saw my request for a refund and any day I’d be receiving the refund. No refund ever came. My CFPB complaint was responded to with the fact that I was told not to refund anymore of these. Basically Incomm said that they have my money and are keeping it.
I’ve thought about a big screen adaptation of the story; a cross between the Big Short and 127 hours:
But I’m not sure I can finance a movie production on credit, and so the poster for the movie is probably as far as I’ll take that idea. If anyone has a production company and is interested in acquiring the rights to the story have your people call my people. (I have no people, so I guess email me).
The irony here is that of the dozens of these that I’ve refunded in the past these two cards were the first two I legitimately refunded. I have to chuckle a little at the humor in the situation.
A Cautionary Tale
I’m fairly sure that this will resolve itself. Right now I’m dealing with people who only have half
a brain of the information; they know I was told not to refund anymore of these but they do not know that Paypal has told me not to load any of these to my account.
Instead of wasting front page space (and your time) with posts updating this I’ll resort inststead to updating this post with my results and any pertinent information.
Update #1 4/5/16: I’ve sent a new complaint through the CFPB to Incomm and Paypal. I’ve worded my complaint differently to try to better explain the situation.
Update #2 4/28/16: This is a no update, update. No response yet.
Update #3 5/31/16: Incomm’s response: As a one time/last time courtesy my money will be refunded via check. A happy ending for all.