I’ve written about people convincing all of their friends and family to get lucrative credit cards, meeting the spend requirements and paying off the cards, and keeping the points. That takes a tremendous amount of trust and I wouldn’t suggest anyone letting their credit be used this way.

There are schemes like this on a larger scale, and they often involve fraud, as Dan’s Deals writes about. People have been offered as much as $10,000 for scammers to use their credit, open up cards for the bonuses. However that doesn’t mean they actually get paid as promised, and they’ve been left holding the bag with charges on the cards that were opened in their name.

And since scammers gonna scam, they may even open the accounts, make purchases, earn the bonuses, transfer points out and return the purchases. They’re doing this intentionally to defraud the banks and keep their costs as low as possible, since they’re generally not redeeming miles for themselves they’re selling premium cabin tickets booked with the miles and are trying to maximize their margins.

Here’s what to do if your frequent flyer account gets audited but the bottom line is I stay as far away from mileage brokers as possible. You may lose your mileage account. You may not even get paid. As they say “The problem with living outside the law is that you no longer have its protection.” You can’t really go enforce the contract. Do you really think you can trust the broker, and the traveler, after you’ve already given them the miles and they no longer need you?

Two men have been indicted in U.S. District Court for the District of New Jersey for opening up small business rewards credit cards in other peoples’ names, earning initial bonuses, refunding the purchases used to earn the bonuses, and selling the miles.

Though they paid real people to allow them to do this, according to the indictment they falsified income information on card applications. They opened up as many as 99 cards per person’s credit.

Oh and by the way they’re alleged to have gotten themselves authorized user cards on the small business card accounts they opened.

In total over 7000 accounts were opened generating over 790 million points, at a cost to the issuer of $8.2 million in miles.

Interestingly that tells us the bank was buying miles on average at 1.04 cents apiece between August 2014 and May 2016 when he scheme is said to have taken place.

• Assume that the price of miles has gone up overall since then with renegotiated card deals.
  
• I wouldn’t take this number too precisely, my experience in similar matters involving airline miles is that value estimates provided by airlines are sloppy.
  
• This is an average, many international carriers charge less for their miles than U.S. ones do.

Nonetheless if I had to guess I’d have guessed something more like 1.1 to 1.2 cents.

My ultimate advice remains, though: never sell your miles, never lie on a credit application (that’s a crime, though only the main perpetrators are charged here), and look skeptically at people contacting you to participate in schemes, there were even multiple assumed names apparently being used here.