Several years ago at another company, I overheard a co-worker of mine lamenting to our travel agent that she didn’t have the credit score to get a credit card and wasn’t sure how she was going to pay for an upcoming business trip. At the time, I had some cards with some pretty sizable annual spend requirements and an idea came to me. What if I added her as an authorized user for the purpose of business purchases? She would receive the reimbursement from work, hand it to me to pay off the balance and it would be a win-win situation. She had the means to travel for business and I would rack up the minimum spend and miles.
I drew up a simple contract basically saying that whatever was purchased on the card whether it was reimbursed or not would be her responsibility. I ordered a card for her and put our plan into motion.
At the end of the first month, I printed off a statement with all of her charges and handed it to her. She turned in her receipt for reimbursement and handed me a check for the exact amount. We followed this pattern for several months and everything was working fine.
After the first six months, I started to notice some personal spending that started to slip in. I didn’t pay much attention to it as I would hand the statement over and receive a check for the full amount. It didn’t really bother me – and it was more free miles.
After a while though, I was handed the check on the payment due date rather than in advance. This meant that I had to have the necessary funds available to cover the entire balance in order to avoid late fees. This worked as well as their check always cleared but I was starting to get a bit nervous. On the other hand, huge sums were running through the card and I was racking up free miles.
After about a year and a half, she found another job with another company and gave her two weeks’ notice. I figured that this was a good time to stop the relationship and get the card back. I handed her the bill and she handed me a check. As I examined the final bill a couple of weeks later – something that was really peculiar was a rather large purchase from an electronics store with a return a couple days later. Why would there be a large purchase the final week of employment?
On a hunch, I inquired with our Accounts Receivables department and asked if there were any reimbursement checks that matched this large amount – and there was. This person had been purchasing large amounts of electronics, getting it reimbursed, and then returning the item(s) and pocketing the reimbursement. I immediately felt sick to my stomach as I felt like I had in some way been a part of this scheme. There was probably a good reason this person couldn’t get their own credit card – had I given a drunk a drink?
I went to the electronics store and asked for all the receipts associated with her card number. I then pulled all the reimbursements and they matched up almost perfect for the past year. I turned over all the information to our internal auditors who launched a huge investigation. I came under scrutiny as well as I was connected with the scheme but was able to show that I had no involvement. They ended up prosecuting her for fraud and reached a plea deal. I never heard from her again and am not sure whatever happened to her career.
The reason that I’m telling you this quite embarrassing story is to just provide some caution as we all look for creative ways to manufacture spend for some extra miles. Looking back, it was quite foolish of me to entrust a card to someone else no matter how perfect it seemed. If something is too good to be true, it probably isn’t true.