My First Manufactured Spending Meetup

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This weekend I took a peek behind the curtain of the world of manufactured spending – and what I discovered surprised me just a little bit!

In the world of manufactured spending (MS for short), relative anonymity is critical.  And as such, many veteran accumulators who practice MS do not welcome publicity to what some consider a hobby and others consider a legitimate business.

I’m grateful to have given this insider view of their world – and in exchange, I’ve promised not to reveal the specifics of any of the specific tricks and techniques I learned about or the identities of those I met.  But they did give me permission to share the generalities of the MS world with you and I hope you will find the peek as fascinating as I did!

Anonymity is key in the manufactured spending world.

Anonymity is key in the manufactured spending world.

Amplified Extreme Couponing

Manufactured spending has origins dating back to the beginning of credit cards offering cash-back or mileage bonuses.  As well, there are also details that trace back to the beginnings of travel loyalty programs.

Remember Adam Sandler’s character in Punch Drunk Love?  He’s based on a real-life guy (who I met several years ago) known in frequent flyer circles as Pudding Guy.  He figured out how to maximize a Healthy Choice mail-in promotion that allowed purchasers to redeem for frequent flyer miles.  While his scheme is forever memorialized in celluloid, there have been dozens of other earning strategies that have made the rounds over years as savvy mileage junkies have found ways to twist program rules to earn the maximum number of miles or points possible.

MS takes this kind of obsession to the next level and involves utilizing credit cards to generate purchases that earn frequent flyer miles.  But MS is not just about using a mileage earning card to buy an airline ticket or new pair of shoes.  At these levels, it involves regularly applying for new cards that promise mileage bonuses, figuring out how to squeeze every last bonus from that card by maximizing the dollars charged to it, and with incredible frequency accelerating the process so that the spend turns over as quickly as possible – sometimes two to four times in one card billing cycle.

“It’s essentially extreme couponing, taken to a much higher level” one veteran told me.  And instead of boxes of cake mix or bottles of shampoo, some regular MS practitioners are sitting on hundreds of thousands of airline miles and hotel points.

There are many ways to complete the MS cycle, but the basic strategy is to purchase some type of third-party currency using a mileage earning credit card (prepaid debit cards, gift cards, etc.) and then either use those to pay for things OR convert them to yet another type of currency so they can be redeposited in some way to close the loop.  Critical to idea of MS is also finding a way to funnel everything you spend money on (car payment, mortgage, even your actual credit card bill) back onto the card itself. For some, speed of this cycle becomes key… if one can max out a $5,000 credit card and then pay off that credit card in a 10-12 day cycle, it becomes possible to turn over the card more than once during the month.

But others say the real payoff on manufactured spending comes with cash-back or other bonus transactions.  Some cards, for example, will give 5% back on gas station purchases (or grocery stores or drug stores or restaurants) so much of the “scheme” in MS revolves around finding ways to max out cards in those places (buying prepaid debit cards at a gas station, for example) and thus not only earning miles but also making money in the process.

Some of the MS transactions have ways of skirting the actual terms and conditions of the programs which is why many are hush-hush about MS in practical application.  As well, the higher end of MS earners are also taking advantage of new sign-up bonuses on cards which means “churning” cards (opening and closing accounts regularly) to maximize those bonuses.

Meeting in Darkened Rooms

The group I sat in with began meeting this past spring and has been growing larger each time by word of mouth. This groups have been popping up in many cities, sometimes publicized on travel message boards.

One of the organizers reserved a back room in a restaurant on the outskirts of a suburban mall complex. It’s the kind of place you’d wander into for lunch in the middle of a back to school shopping outing (which is exactly the crowd that had gathered there during the Texas annual tax-free shopping weekend).  I doubt many of the families eating lunch that day paid much thought to the variety of individuals walking into a private back room.

“I wasn’t sure how many people would be here… but we are growing each time” an organizer shared, as our group continued to swell.  There were a total of 15 individuals there that day, more than double any of their previous meetings.  “Next time we may need to plan for more!”

The room was large so there was plenty of room to spread out, important on a 100+ degree Texas day.  After ordering cold drinks and being served free chips and salsa, they started around the table with introductions – name, neighborhood/town, how long they’d been in MS, and why they were doing it.  The group was varied in ages – from college-aged to near-retiree – and hailed from a wide radius around our meeting spot.  Many were brand-new to MS but all were doing it to find another way to pay for travel expenses, either for themselves or for a family. A couple individuals brought family members with them – either for a sense of safety in numbers or to indoctrinate them to the world of MS.

“Where did you say you lived?” was asked several times.  I’d find out later that this is of extreme importance to the crowd.

One enthusiastic member introduced himself by showing his latest stack of prepaid debit cards… “this is my latest haul”.  Others nodded their approval while some of the newcomers (me included) were wide-eyed at the size of the stack.

When they got to me, I decided to lay all my cards on the table too – not debit cards, but why I was there!  “I’m Jennifer, I’m from Fort Worth, and I’ve never done this before… in fact, I’m a blogger.”  Nervous laugher… both from me and the others at the table.  “But I promise I’m not going to share any of your secrets… I just want to understand what this is about!”

Secret Societies

The MS crowd has many reasons to not trust bloggers – or outsiders.  The world of MS is complex and often operates on the edges of the rules of credit card companies.  For this reason, lucrative deals often get shut down when a loophole is too flagrantly violated by many.  Or often the companies themselves are not aware of the means for exploitation so low volume and no traceable documentation keeps the transactions off the radar.

Some of the conversation took me back to my early career days as a credit analyst for a retail card issuer.  I spent much of my time on the “special projects” desk and one of our tasks was to review seemingly unrelated transactional data to look for common trends that might point to fraud or abuse.  Once we found patterns, we researched them and passed on data that would be used to build algorithms that would flag future abuse.

As the group started to break from group discussion to smaller conversations, it became more difficult to listen to the details.  I had heard this mentioned by others who participate in the hobby that many prefer to pass their secrets on only on a one-on-one basis to individuals who have been proven to be trustworthy.

“At first, it becomes about just understanding what you are doing”, one friend told me offline, when I mentioned my interest in the topic.  “But once you understand the basics, you keep coming back because the really good information isn’t shared online – not until the very end of the deal at least – so you have to have relationships so that you hear about the best transactions and new methods on a private basis.”

Privacy is definitely an issue in this group where practitioners are regularly looking for hidden places to trade secrets.  Several mentioned a new travel website I’d never heard of, created with multiple trust levels, so that only vetted insiders could get to the “good stuff”.  They want the hidden spots both to steer clear of “spies” (from card issuers, retailers, or travel partners) and to keep some bloggers who are known to widely publicize deals (and get them “killed” quicker) away from their tricks.

This issue was a big one in the last week in the travel blog community actually. A respected travel blogger shared a trick she believed she had come across on her own, but one that it turns out has been whispered about for months in the MS community.  She removed her post as soon as it was brought to her attention, but many at the weekend meetup were still discussing it.  “I tried it in four places this week… its not working anymore here” one noted about that particular transaction.  Another chimed in “I just did it today before I came here”.   “I know, I was behind you in line” said another.

It’s for this reason that many of the MS crowd find it important to know the locations of the others in the community – and their relative MS patterns.

“If there is someone going to my regular gas station and doing high volumes, I might need to be on the lookout for a new spot in case he gets it shut down” said one person.

Another disagreed – “I want to know their location so that I can trade tips – it’s much easier than driving all over town looking for the one working machine or a good supply. If someone else is going somewhere nearby, it benefits the community to share information.”

Pushing the Limits

Those practicing the hobby have a wide range of earning levels.  Some say they are earning a few hundred to a few thousand miles each month.  Others report earning 500,000 to a million miles in a year.  And some extreme MS practitioners online claim to be doing $100,000 to $2 million in transactions every month, turning this from a hobby to a full-time business.

Doing that type of volume often requires relying on the accounts of others in order to have enough credit to work with.  Several of those present mentioned that they had used the social security numbers of others (spouses, siblings, parents, adult children) to open more accounts and were in charge of MS on those accounts as well.

“Its a family endeavor”, one said. “They benefit from the vacations, so they need to participate with the cards.”

Still, the risk tolerance for those in the group was variable. It seems that each individual has their personal limits of what they feel comfortable doing and no two strategies seemed the same.

“I wouldn’t advise doing that”, one whispered to me when another shared a tactic for opening generic business accounts by using a social security number as an EIN (Employer Identification Number).

Another raised his eyebrows when a group member mentioned that they were converting high volumes of cards back into money orders and depositing them into a bank account.  “Aren’t you worried about that?!” one said out loud. To some the connection back to the personal bank account, both incoming and outgoing, poses too much risk.

At the end of the day, MS becomes and exercise in risk tolerance and requires practitioners to carefully consider their own actions versus blindly following instructions.

Speeding Towards a Useless Currency

One question I asked a few of the veterans was whether they thought that the rapid accumulation of miles was leading to increases in redemption “costs” (in miles) for coveted awards.  American Airlines, for example, recently steeply raised the prices of their AAnytime mileage awards while also eliminating a multi-partner product that was popular among the extreme mileage crowd for creating around-the-world tickets at reasonable mileage rates.

They all said no.  “We were headed towards inflation on mileage prices at any rate” said one. Another commented “we aren’t putting that many additional miles into the mix.  We are just earning them by spending instead of flying.”

Still, several mentioned to me that while they were having no trouble accumulating miles, redeeming them was tough.  MS meetup groups may attract newcomers to learn about the tricks of earning, but several veterans mentioned that came also with the hope of learning the tricks of using their miles.  They all scour travel blogs looking for hints on how to search for awards or best windows for redemption.

As I was wrapping up this summary, I took another glance through the blogosphere and the credit card offers are everywhere.  In fact, a couple issuers regularly pay for advertising on my blog (even though I personally will not place credit card affiliate links here).  There is clearly bigger money at play than to worry about the world of MS too much.  Or perhaps its still a small enough subset that the credit card companies still make their money at the cost of those who try MS and fail. They max their cards and then can’t afford to pay them off.  They open too many cards and hurt their credit and get stuck with the higher interest cards.  Or they underestimate the time and perseverance it takes to properly engage in MS and end up only earning a few thousand miles that they never end up redeeming.

And that’s okay with the MS crowd.  Next month there will be newcomers to the hobby.  There will be a new strategies to try or share.  And there will again be chips and salsa in a side room in the suburbs.


About Jennifer Moody

Jennifer is a management consultant and avid volunteer. Her career and volunteer duty travels have helped her log top-tier airline and hotel status annually for the last eighteen years. In addition, she embraces the opportunity to maximize her vacation time by planning extracurricular trips that have taken her to over 60 countries and 48.5 US states. Although she averages 200 days a year on the road, she loves to return to “the homestead” in her native Fort Worth, Texas where she enjoys cooking, gardening, sewing, needlepoint, wine, and cocktail mixology.

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Comments

  1. This sounds like a Mileage Mafia. Kudos to those that have figured out their systems and have committed the time to this. You’re right about the extreme couponing comparison. I can only imagine the storage rooms some people would need if airline miles were in physical packages.

  2. Whoever the DB was who showed off the amount of gcs he had deserves a swift kick in the nuts. If you play the game, keep your mouth shut. Period. Don’t brag to others. Don’t brag to cashiers. Don’t brag to your friends. And NEVER brag to bloggers who don’t give a damn about the hobby and are only interested in eyeballs to their sites and conversions.

    What you left unsaid was how many techniques have quickly died in this game in just the last 6-12 months. If you aren’t well connected as to the vagaries of the methods, you could be very sorry, very fast. I know many were left holding thousands of cards they couldn’t redeem easily – all because they didn’t understand the risks and relied on one lone method and were caught when the method quickly died. And that’s how many get hurt – just one month of interest on these cards (notoriously high interest cards) overwhelms the value you get from the points.

    Imo, unless you have deep pockets (to cover thousands of float when – no if – things go wrong), a talent for juggling numbers, are okay with making calls to “fraud” departments, have a lot of spare time on your hands, and are in an area where MS is conducive, you’re better off searching for discounted paid tickets. I suspect the vast majority will find the reality of MS is a lot less enticing than it sounds.

    • I don’t personally engage in MS – I’m not organized enough and I’ve had too much exposure to the forensic side of this (issuer side) to want to take the risks with a credit line that I rely on for business and other expenses. I think you sum it up well – “deep pockets” and I’d add to that “a high degree of risk tolerance” are required to play this game. What amazes me is how many new people seem to be stumbling into it every month and that’s largely why I wanted to attend one of these meetings and be a fly on the wall. As a blogger, MS is not my wheelhouse… and as a frequent flyer elite traveler, I consider the MS folks to be my “competition” when it comes to the awards I want to use.

    • I would like to see airlines have expanded award availability for elites – or maybe give us X number of saver redemptions per year with our status. I’ve really noticed it with American this year – I never had an AA Saver award availability problem until recently.

      • AA does offer “expanded saver availability” to it’s Executive Platinums. It’s never been clear to me what this means exactly, but I do recall one time where I wanted to redeem miles that weren’t available on the website at the saver level, but the phone agent was able to release the seats. But that’s one time in 5 years of being an EXP.

      • It has been a couple of years since the last time the EXP desk came up with an AA Saver for me that wasn’t on the website. But admittedly, I mostly use partner awards these days as the redemption rates for what I fly (international F) are better and the value proposition even with a Saver is just not there. As a result, my biggest concern is how to get the domestic F segments to connect to my gateway city. For example, I’m currently stalking one day in November for DFW-NYC and coming up dry – and that’s an award booked five months out. Right now I’ll be in Y connecting to an F award JFK-HKG-SIN – crazy!

      • My experience lately, has been that AA doesn’t want to book domestic segments to connect to partner flight. Especially if you could fly outbound on the partner, from a much closer gateway. For example, ORD to HKG has 2 flights, but only one has 1st class. But that one flight is all booked, so you check SFO or LAX, because those flights have F award seats. No go anymore, as AAdvantage agents are totally unwilling to book connecting flights to other gateways. I have had this happen constantly for the last 2 months. Seats are there, on AA for the domestic portions, as AA.com shows real time availability. People I know, who are Exec Plat., are also experiencing this now as well.

      • That definitely seems to be a recurring theme with a lot of EXPs I talk to. At the end of the day, there are a LOT of miles out there floating around and limited seats to put people in (if they airlines want to sell seats too). That leads to a harder time using miles… and thus devaluation.

  3. If you plan this right and know what you’re getting into this is very low risk. I can make an equivalent of $200 an hour doing this part time for a few Gs of side income a month. I MS almost exclusively for cashback.

  4. I’m one of those that used to push through >$1mm in spend per month. I’ve recently stopped altogether but am starting back up again, this time with slightly different methods. The game is always changing, and you can’t rely on others to be spoon-fed. That may work for one or two tricks, but they probably won’t last long.

  5. Good for you to have gotten the inside track. I found the overall tone of this article to be somewhat arrogant. So, you know, you’re in the inside circle, you’re “one of the guys”, but you won’t tell anyone. It’s a secret and none of your readers is allowed to hear it. Arrogant. Don’t get me wrong. I get it. If you share it, deals will get killed. But if it’s a secret, just don’t write about it. It just sounds like you’re bragging about the “cool kids club” that you’re in but no one else is allowed in. Just my opinion. If I’m wrong then no harm no foul.

    • In their world, I’m hardly one of the cool kids as I don’t do manufactured spending. In fact, I admitted to them (a bit embarrassed) that I’ve earned 4 million miles on AAdvantage and not a single one of those came from a credit card bonus. I know their club involves Vanilla-flavored Bluebirds and some girl named Kate and a guy named Simon, but beyond that I’m as much of an outsider as you are. Perhaps that makes me the fool for not taking notes on the deals themselves, but that’s not why I was there. 😉 Arrogant, no. Dim (in their eyes), perhaps.

    • Also, this meetup wasn’t one that anyone wouldn’t be able to find if they wanted to have attended it. They publicized it on three different internet message boards, at least two of them where anyone can register and read the posts. I found it on FlyerTalk.com in the Community forum, where several of these are advertised each month.

  6. I’ve been working my own MS game for years now. I was doing about 100k a month but now not so much. It becomes so time consuming and take over your life. It’s more of a drug then the free flights. To be honest I don’t even redeem many of my miles and when I do it’s saver coach tickets. I know most like to blow miles on CX first class but I still can’t justify spending that kind of miles even when their free.

    • I can see where this would get addictive! I’d have so much trouble not spending the miles. Perhaps that tendency to spend and not save is why I don’t play the game.

  7. Secret MS Societies? Why that is all an Urban Myth! Never happened, and if it did, everyone living soul would deny it. Those that wouldn’t would soon be sleeping with the planes at AMARC.

  8. I agree – I compete against these people for the award seats and 90% of my miles are earned by butt in seat mikes. But, the airlines are earning millions of dollars by selling the credit card miles and, thus, they are content with a small percentage gaming the system. I guess rules truly are made to be broken.

    • My thoughts too. I think that’s why I’ve been fascinated by how the MS world works. I’m bumping into these folks on my award trips and trying to figure out where they all came from out of the blue!

  9. I recently purchased a house and just paid my first mortgage payment yesterday, and guess what; my mortgage company accepts credit cards! For no fee! WHAT?!?! #shhh

  10. Although I am an infrequent user of easy MS methods only, I hate the term ‘gaming the system’ in this context. Airlines want to make money by selling more miles to banks, and some people feel the need to collect more for travel or just for the heck of it. Why be judgmental and start putting tags on them just because you don’t have the inclination to join them? Calling your competition by names is not going to make them disappear. You merely expose your own meanness.

    • I don’t think its mean of me to use the phrase “gaming the system”. If all of this were 100% kosher, why would there be a need to talk about it in the open and let everyone in on exactly how to do it? Perhaps because the banks are not okay with it – that’s the “gaming” part.

  11. First of all I apologize for coming out a bit too harsh.

    It is 100% kosher; the only thing is that the banks would not like everyone doing it and the miles collectors would not want everyone to know and force the bank’s hand. Banks have the means to monitor this kind of activity and totally stop it, but they tolerate and let it go on at a low level. The term morality is generally defined differently by different economic groups, and everyone is at a different rung depending on how much they can afford to buy of it. 😉

      • ‘Some benefit more than others’ — just like some have the opportunity to accrue more miles because their jobs involve business travel and they can earn more ‘butt in the seat’ miles. Those of us whose ‘butts are glued to office chairs’ or are retired tend to apply for more cards to get bonuses and to meet the hefty spends ($2-5K/new card), do some degree of innovative spends.

        Any time I put tags on people below me, I am mindful of the fact that there are people in far superior economic condition than I, who have the option to put the same tags on me too. I have seen some traveling ‘saints’ who find ways to create conditions to force business travel, take longer than necessary routings to earn more miles, spend extra nights out on some pretext or the other for more hotel points, take evening flights on purpose so that they can work all day and then get paid overtime for the after hours time flown, and the list goes on. But who am I to judge!

      • In the eyes of their corporate travel department (or more likely their accounting department), those guys are gaming the system too. I used to do it all the time… templates to support the fact that I was flying from Denver to San Jose via Taipei to save the company money, etc. Did they like it? No. Was I breaking any rules? None that they had written. Was I gaming the system? Absofreakinglutely… and I loved every mile I got from it.

      • ‘Was I gaming the system? Absofreakinglutely… and I loved every mile I got from it.’

        And that is the gist of of it all. People with opportunity to do business travel and earn miles/points, MQMs and collecting travel vouchers by volunteering to take the next flight while on business, tend to look down on people racking in miles from alternate means as ‘gaming the system’. They never stop to look in the mirror to see how many warts they have on their collective face!

      • I think you are reading into this that I somehow look down on MS. I don’t. I just don’t do it myself… not because I’m above it (or it’s beneath me), but because it’s a risk I am not in a position to take.

  12. secret societies? gmafb, lol. this reads like the MS version of a pocket romance book. let me rephrase to reality: ‘clueless newbs who know nothing get together hoping one of the others is NOT also a clueless newb. as all are clueless, the net-net is they share nothing useful whatsoever except lame stories about ‘1 time at cvs i…..’ whilst even more clueless blogger looks on in awe’. ok… now it’s accurate

  13. “some regular MS practitioners are sitting on hundreds of thousands of airline miles and hotel points”
    -it’s relatively easy to get hundreds of thousands; some of the serious MS ‘practitioners’ can get many millions in a year.

  14. Someone I know attended this meeting (could it be “me”?) It seems your bolded subtitles above show your obvious bias …

    Amplified Extreme Couponing (a little hyperbolic don’t you think)

    Meeting in Darkened Rooms (it was a separate room in a restaurant that was very bright, people were squinting, so we asked the blinds to be closed some — not that you would have noticed with your back to the windows)

    Secret Societies (really, almost no one knew each other before the meeting — Webster doth protest!)

    Pushing the Limits (you mean like your article?)

    Speeding Towards a Useless Currency (ok, would you mind give me the many millions of “useless” miles you told us you “earned”?)

    Guess Mark Twain was wrong when he said, “Travel is fatal to prejudice, bigotry, and narrow-mindedness”?

    • This illustrates perfectly just how variable even the participants in MS view it. You must not have been standing there (in a smaller group) when several attendees said it was “exactly like extreme couponing” which I guess is biased only if you judge extreme couponers. Closed blinds tend to darken a room, certainly from my vantage point. As far as the secrets go, there was much talk of the hidden forums on message boards. Hidden = secret. As to devaluation of miles, both UA and AA (big currencies in the MS world) have dramatically raised their award redemption amounts while coveted awards have simultaneously grown more difficult to book. If that’s not speeding towards something, I don’t know what is!

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