WALL STREET JOURNAL REPORTS U.S. MINT CREDIT CARD REWARD SCAM

Enthusiasts of frequent-flier mileage have all kinds of crazy strategies for racking up credits, but few have been as quick and easy as turning coins into miles.

At least several hundred mile-junkies discovered that a free shipping offer on presidential and Native American $1 coins, sold at face value by the U.S. Mint, amounted to printing free frequent-flier miles. Mileage lovers ordered more than $1 million in coins until the Mint started identifying them and cutting them off.

Coin buyers charged the purchases, sold in boxes of 250 coins, to a credit card that offers frequent-flier mile awards, then took the shipments straight to the bank. They then used the coins they deposited to pay their credit-card bills. Their only cost: the car trip to make the deposit.

Richard Baum, a software-company consultant who lives in New Jersey, ordered 15,000 coins. "I never unrolled them," he says. "The UPS guy put them directly in my trunk."

Patricia Hansen, a San Diego retiree who loves to travel, ordered $10,000 in coins from the Mint. "My husband took them to the bank," Ms. Hansen says, and she earned 10,000 miles toward free or upgraded travel.

Even with all the offers that are available, the deal the Mint offers -- free miles without spending any dollars -- is unique. The Mint says the dollar-coin free-shipping offer began in June 2008. About $130 million in coins have been issued to 40,000 buyers, mostly coin collectors, community banks and small businesses such as vending-machine companies and car washes.

The Mint says it costs, on average, about $3 to ship each 250-coin box. So $10,000 in coins would be 40 boxes, or $120 in shipping. As for credit-card costs to the government, a Treasury Department agency handles all government credit-card transactions and negotiates costs. No particular credit-card expense is charged to the Mint, a spokesman says.

In late August and September, officials noticed a sharp uptick in "large repetitive orders" from a group of individuals, Mint spokesman Tom Jurkowsky says. At about the same time, the Mint received reports from banks around the country that coins were being deposited that were still in their U.S. Mint boxes, he says.

Officials found Internet chat rooms where the coins-for-miles scheme was detailed. Letters were sent to customers asking whether their intended use complied with the program's purpose. Customers who didn't respond were blocked from the program, Mr. Jurkowsky says. Fewer than 400 buyers were blocked, he says.

"Is this illegal? No. Is it the right thing to do? No, it's not what the program is intended to do," Mr. Jurkowsky says.

To read the complete article, see: Miles for Nothing: How the Government Helped Frequent Fliers Make a Mint (online.wsj.com/article/SB126014168569179245.html)

Wayne Homren, Editor

	NBS (coinbooks.org) Web