New Theft by Amazon of 12-Year-Old’s Birthday Gift Cards

Update on 2019-11-04: Amazon restored Mr. Bowser’s son’s gift card balance! I have included an update from him at the very end.

I received this from a fellow Central Floridian father whose 12-year-old son was lucky enough to receive $335 in Amazon gift cards from friends and family at his birthday party. Amazon ended up banning his account after he tried to order items for himself and gifts for his family, and then Amazon has been jerking Mr. Bowser around, claiming that they can honor only $125 of the gift card balance.

Of course, if pressed Amazon might end up claiming that some of the gift cards applied to the account were purchased with stolen credit cards, but they never have to prove anything and always blame the recipient of the gift (victim blaming). They also steal the whole gift card balance, rather than just the purported illegitimate gift cards.

When reading accounts like this, keep in mind that Mr. Bowser just happens to be vocal and will not stand for this, whereas many other Amazon victims would not speak up like this. Also, that he is willing to speak up shows that he is not engaged in crime; people who are buying Amazon gift cards with stolen credit cards or laundering drug money are unlikely to be publicizing their situation.

Regarding the legality of Amazon’s actions, what they are doing is definitely illegal and although I am not a lawyer, I have cited several laws and presented a legal argument against their behavior in a typed deposition I gave in 2018 as an expert witness for a customer’s small claims lawsuit against Amazon for having over $3,000 of gift card balance stolen.

I do also want to clarify that I still use Amazon and that when they banned me in 2015, the notice did not include verbiage seen by some about not being allowed to create another Amazon account. Amazon has become a bit like a public utility in the same manner as Google, Facebook, and others; it is difficult to not use it and unfair to tell those that are dissatisfied that they can just go elsewhere. Of course, no one on the Internet can avoid using or connecting to Amazon Web Services, but also I am not one to avoid ordering from them if they have the best price, and Amazon is often losing money on individual orders in order to drive others out of business and maintain a dominant market position. But, I am careful to avoid accumulating an Amazon gift card balance that I am not prepared to lose.


AMAZON.COM STOLE MY 12-YEAR OLD SON’S BIRTHDAY

By Michael Bowser

My son, Morgan just turned 12. As many kids his age, he didn’t want gifts, but instead asked for cash so he could buy whatever he wanted. We recommended Amazon gift cards so he could begin learning about online commerce, patience, comparative shopping, and looking for value. Too often kids his age get excited and fall into impulse buying when a store does not have “exactly” what they want.

He received $335 in Amazon gift cards from his family and friends. This seemed like a financial windfall to him (and us). We set up his own Amazon account, uploaded all the gift cards and even signed him up for “Prime.”

He spent hours shopping, reading reviews and choosing exactly what he wanted. His cart had surprisingly little for himself, but included items like a bag of 60 Hair Scrunchies for his sister and an Ice Cream Maker so our family could make Ice Cream together. He loved the idea that he could now buy things for others with his own money.

On October 23rd, he finally placed his order.

On October 24th, he received the following e-mail from Amazon:

Hello,
 
We have closed your account and canceled all outstanding orders.

We took these actions because you were using Amazon Gift Cards that are in violation of our Terms and Conditions. We cannot reissue the gift cards or reimburse you for these funds.
 
If you believe you received this message in error, please call Customer Service at: . . . .

You can find more information on the Gift Card Terms and Conditions Help page:

My wife and I both contacted Amazon and both got different stories.  My wife was told they would review the situation and get back to us within 24 hours.  They told me that it was a closed case, his account was cancelled and his gift cards were all deactivated with no hope of reissue.  I was told specifically that there was no “next step” and “no one else to talk to.”

In neither case did they offer an explanation of what the violation supposedly was.

I poured over “Terms and Conditions” for Amazon, Gift Cards and Amazon Prime.  I could not find anything that would be considered a “violation.”

I reached out to everyone who had gotten him a gift card to see if any had come from questionable sources. All were purchased from Amazon directly except the ones we, personally got him from Publix (a large, reputable grocery chain in Florida).

After 24 hours, they did reactivate his account, but only reactivated $125 of the gift cards. He was still missing $210. Their response was to offer us $85.

WHAT? We obviously said, “No! We want the full amount back in there.” Amazon said they would have to review it and get back to us. This time, they said 3 to 5 days.

I tried to remain calm, certain that this was some kind of horrible mistake. I scoured the internet for people who may have had a similar problem to get a clue regarding where the problem was.

It did not take long before I was down the rabbit-hole.

I quickly found dozens of similar reports. For years, Amazon has been doing this. The only common denominator seems to be accounts with a large gift card balance. The magic number seems to be $300 but I found reports of people losing over $10,000.

This link: https://thripp.com/2015/09/amazon-steals-gift-cards/ is where I found legal complaints made by Richard Thripp, an Education Ph.D. candidate, to the Attorney General of Washington in 2015. He went through the same thing.

Amazon’s response to him was:

As noted in our Conditions of Use, in the section, “Your Account”: “Amazon reserves the right to refuse service, terminate accounts, remove or edit content, or cancel orders in its sole discretion.”

“Refusal of Services” not-withstanding, I still fail to see how they can justify the seizure of legitimate gift cards as anything but “theft.” Since when does a company’s “Terms of Service” supersede the law?

I started realizing, this may not just be an “honest mistake.” This seems like systematic theft or, at the very least, gross negligence. These are generally small enough amounts that it may go unnoticed. When a customer pushes back against the behemoth, they are met with gatekeepers armed with scripts and corporate bureaucracy designed to confuse, delay and exhaust. I am sure the vast majority simply give up.

Sadly, I can not simply give up.

This experience was intended to be a lesson for my son in commerce. It has become a lesson on standing up for yourself. If I simply give up, cut Morgan a check for $335 and let him loose in Walmart, what kind of lesson am I sending him? What will he do the next time someone tries to take what is his? What would Captain America do?

I will continue to fight this to set a good example for my son. Even if my efforts do not provide him with a worthy lesson, Amazon has provided him with an equally valuable one: “Cash is King” and “Support your local Retailers.”


Update on 2019-11-04: Amazon restored Mr. Bowser’s son’s gift card balance! Here is an update from him:

November 4, 2019

Thank you for your support. On Saturday, November 2nd, the full amount has been restored to Morgan’s Amazon account. Resolution took 10 days, half a dozen calls, multiple Facebook postings, shares, blog postings, e-mails to news outlets and countless hours of effort.

There was no explanation of why his gift cards had been taken in the first place, where the problem was, or what finally led to the resolution. It may have been our steadfast diligence, the outpouring of support or simply the passage of time necessary for the corporate process to take place. Ultimately, the money simply appeared back on his account with a brief automated e-mail from Amazon stating that his balance has been restored.

We will probably never know the details, as I am sure Amazon feels no compulsion to explain their actions, lest they implicate themselves to some level of culpability. I know that many would feel we are owed “compensation” for our inconvenience. A gesture would be nice, but many in today’s society are excessively greedy. Amazon has no way of knowing we are not looking to take advantage and only want what is right.

I understand that we all make mistakes, but, sadly, this lack of explanation leaves me with a serious lack of trust moving forward. I can’t help but wonder when something like this will happen again to us, or someone else.

Please be careful, diligent and vocal. I doubt that this story is truly over.

Announcing the Final Examination of Richard Thripp for the degree of Doctor of Philosophy

It has been a busy season for us with our eight-month-old son and completing my Ph.D. dissertation on the financial knowledge of Florida preservice teachers. Here is my official dissertation defense announcement, due to take place on November 7, 2019.

UCF College of Community Innovation and Education logo

Announcing the Final Examination of Richard Thripp for the degree of Doctor of Philosophy
Thursday, November 7, 2019 at 2:00 PM
University of Central Florida, Main Campus (Orlando)
Education Complex, Room 306

Dissertation Title: A Survey of Investing and Retirement Knowledge and Preferences of Florida Preservice Teachers

This dissertation investigated the financial and retirement knowledge, concerns, and preferences of preservice teachers at the University of Central Florida. The author developed a 39-item survey instrument and administered it to 314 preservice teachers in undergraduate teacher education courses in Summer and Fall 2019, who were primarily female elementary and early childhood education juniors and seniors. Topics covered included familiarity with plans, preference for pension plans versus defined contribution plan or increased salary, concern over pension vesting requirements, knowledge of the Florida Retirement System, anticipated challenges in funding retirement, financial knowledge, concerns about debts, and retirement investment preferences using a mock portfolio allocation exercise. For comparison, an electronic version of the survey was administered to 205 Amazon Mechanical Turk workers for $1.00 each, who were U.S. college students or graduates ages 18–25. Findings showed that preservice teachers had statistically significantly lower financial knowledge and retirement investing literacy; even those who were Age 25 or younger chose to put more than half their retirement money in money market and bond funds, which will almost certainly underperform equities over several decades. Although it may be ill-advised, 54% of preservice teachers preferred a defined-contribution plan over a pension plan. Preservice teachers were not particularly concerned about debts, but anticipated that low salaries will impede their ability to save for retirement. These findings suggest a need for financial education targeting Florida preservice teachers, particularly given that the Florida Retirement System substantially cut its benefits in 2011.

Major: Education Ph.D., Instructional Design & Technology
B. S. University of Central Florida, 2014
M. A. University of Central Florida, 2016

Committee in charge:
Dr. Richard Hartshorne
Dr. Debbie L. Hahs-Vaughn
Dr. Bobby Hoffman
Dr. Shiva Jahani
Dr. Gary Mottola

Approved by Dr. Richard Hartshorne, Committee Chair

The public is welcome to attend.


Keywords: financial literacy, preservice teachers, Florida Retirement System, retirement knowledge, financial challenges, plan preferences, investor behavior, nonwage benefits

Acknowledgments

I extend heartfelt thanks to Dr. Richard Hartshorne, my adviser, supervisor, dissertation chair, mentor, and friend, who gave me timely and valuable feedback, opportunities, and support at each step in my doctoral and teaching journey at the university, particularly as I developed my fervor for financial education and research. He was always patient even when I abandoned projects, missed deadlines, and delivered flurries of ill-conceived ideas and horrendous drafts. I also thank my fiancée, Kristy White, for providing invaluable support, particularly as we are new parents to a handsome baby boy born in February 2019. Working with my other committee members, Drs. Gary Mottola, Bobby Hoffman, Debbie L. Hahs-Vaughn, and Shiva Jahani, has been most helpful and instructive. I am appreciative of the opportunities, support, and resources I have been afforded at University of Central Florida over these past seven years. When in 2012 I set out to go back to school and earn my Bachelor’s in psychology, I had no idea I would end up coming this far. Thank you, Drs. Bobby Hoffman, Atsusi Hirumi, and Richard Hartshorne for accepting me to the Applied Learning and Instruction M.A. and Education Ph.D. programs, as well as Dr. Ronald DeMara from the College of Engineering and Computer Science. My favorite part of my time at UCF was instructing over 250 preservice teachers in educational technology as a Graduate Teaching Associate. Bringing a love of learning to others, at a massive scale, is an integral part of our identity and mission as Knights. Finally, I am profoundly thankful to the UCF students and Amazon Mechanical Turk workers who participated in this survey, as well as Drs. Junie Albers-Biddle, Kelsey Evans-Amalu, Regina Gresham, Marni Kay, Nevine Snyder, Lee-Anne Trimble Spalding, Cheryl Van De Mark, Scott Waring, and Anna Wolford for allowing me to visit their courses, without which this dissertation would not have been possible.

Capital One Capitulates; Issues Checks in June 2019 for $500 OFFER500 Money Market Promotion from October 2018

In February 2019 I had written about Capital One offering a $500 incentive to open a money market account in September–October 2018 under promotion code OFFER500 if one made deposits of $50,000 or more. Capital One’s terms for this promotion did not say that one could not deposit, say, $10,000, transfer to an external bank, and then re-deposit the amount five times in order to meet the requirements. In addition, they had been automatically paying out the $500 bonuses to all customers up until September 24, 2018 who did this, within just 1–2 business days of the deposits being completed, but then halted this even though customers should have had until October 31, 2018 to meet the requirements, and claimed that such activity did not qualify (although they did not claw back bonuses already paid out).

As reported by Doctor of Credit on June 17, 2019, Capital One has now been quietly issuing checks by mail to all customers who they had previously denied the bonus to. Although my continued complaints and threats of suing in small claims court resulted in Capital One offering a settlement arrangement subject to a non-disclosure agreement, my fiancée who also participated in the promotion recently received the letter and check shown below. In fact, she got $6 extra as well:

Capital One check for $506

The text of the letter states:

Attached is a check for your 360 Money Market bonus.

Dear [name],

Late last year, you didn’t receive the $500 bonus that was offered for your 360 Money Market account ending in ####.

This check for $506.00 covers that bonus — plus interest.

If you have any questions, give us a call at 1-888-464-0727. We’re here to help Monday through Friday, 8 a.m.–6 p.m. ET.

Thanks for saving with us.
Capital One

Even customers who did not complain are being issued checks by mail, and those who already complained and were offered a smaller consolation prize (most commonly, $200) are now receiving checks for $306 to make up the difference.

This is another example that putting pressure on corporations who defraud customers can produce positive results. I have no idea how many customers Capital One stiffed, but even if it was only 2,000, that’s $1,000,000 they are now paying out, and it’s possible my complaints to Capital One’s Office of the President, Florida Attorney General, and Consumer Financial Protection Bureau played a part in their decision to capitulate. Obviously, they would prefer to privately pay the bonus only to customers who complain vociferously, but in this case they totally capitulated and decided to pay, 8 months later, all the money they would have paid in the first place had they simply honored their end of the contract.

Capital One is keeping this quiet, not mentioning it by email or in online banking, nor are they depositing the bonuses directly to customer accounts, but instead are issuing checks by mail. Although a customer could just end up throwing out the check by accident thinking it is another credit card or auto loan advertisement from Capital One (the envelope is no different from these), in these cases I am not sure Capital One would get to keep the money or have to escheat it to the state after several years as unclaimed funds. Regarding my continued complaints about Amazon.com stealing customer gift card balances, I am almost positive Amazon is skirting state escheatment laws, however.

Capital One is one of the most heavy handed of credit issuers; no other lender sues more of its customers in small claims court seeking payment. They are a notorious subprime lender that abuses customers with especially high usury interest rates and worthless credit cards with annual fees and no rewards. Of course, the whole industry participates in usury, thanks to a 1970s court case that determined that credit issuers could headquarter in usury-enabling states like Delaware and South Dakota to evade usury laws in their customers’ home states. Even Florida, which does not have a particularly stringent usury law, caps interest rates at 18% annual percentage rate, which is why credit unions who charter in Florida can’t exceed this APR on their credit products, but Capital One and others routinely demand APRs of 24.99% or even higher.

As alluded to in my February 2019 post, in March 2019 I switched from the Republican to Democrat party and will vote for Elizabeth Warren in the Democratic primary (who, incidentally, was also a Republican until age 46). Warren is a professor-turned-senator who has a long history of advocating for consumers in financial matters, including spearheading the founding of the Consumer Financial Protection Bureau. Although I have now learned that addressing the climate crisis is objectively and undeniably more important than financial literacy or advocacy, the broader issue of wealth inequality is related to both financial literacy and the climate crisis, in that the wealthy have manipulated the government and the people into abetting their theft (via tax schemes, collusion, privatizing profits while offloading liabilities and debts onto the public) and genocide (via greenhouse gas emissions), while simultaneously encouraging a culture of self-blame where the victims of plutocracy are indoctrinated to blame themselves for not understanding predatory financial products or failing to recycle plastic cups, instead of demanding real justice and change.

Previously, I had wrote that my flights to California and China to visit family will kill people in 2075 and 2150 due to exacerbating the climate crisis. In fact, I conveniently forgot the many people who have already died and are presently dying from heat waves, flooding, famines, and other disasters caused by humans flying, driving, building with steel and concrete, and other madness (e.g., California wildfires, Hurricane Maria in Puerto Rico, flooding in Bangladesh). The wealthy, and in particular the extremely wealthy, are disproportionately responsible for mass murder, but take no responsibility and in fact have a sense of entitlement that they earned their position and should be enabled and empowered to partake in grotesquely wasteful and unnecessary travel and to possess multiple large residences, without consequences or accountability. This is abhorrent. There should be no doubt among those who have educated themselves on the matter that the climate crisis is the ultimate issue of our times, and there is much suffering to come.

Beethoven Moonlight Sonata 3rd Mvmt. (2019-05-14)

This is the culmination of many years of practice and I still have a ways to go in many sections.

Video was horizontally flipped by my cell phone, unfortunately.

I had not practiced this piece for several years before picking it up again about six months ago. This recording is greatly improved from my 2012 recording, and in fact in the month since recording the above video I have also improved quite a bit more. I have also been working on the first and second movements which I had not paid much attention to previously. The first movement is much better known and easier to play.

About Retirement Saving and the Florida Retirement System, Part 2

Continued from Part 1

John Mauldin published an article yesterday in Forbes about the coming public pension crisis. Many states and local governments do not have enough funds to pay future benefits, let alone current benefits, and spending on education and public works is being curtailed due to these shortfalls.

In Florida, the pension crisis is not much of an issue because the Florida Retirement System (FRS) is 84% funded based on actuarial projections ($161 billion of assets) and offers a separate, paltry monthly stipend for medical expenses rather than the generous health benefits offered by many other states. In 2011, the FRS also devalued the program in the following ways:

  • New 3.0% payroll deduction (formerly none)
  • State contributes 3.3% to DC plan (formerly 9.0%)
  • DB vesting period: 5 -> 8 years
  • DB salary lookback period: 5 -> 8 years
  • Full DB benefits 33 years / Age 65 (formerly 30 / 62)
  • DB inflation adjustment removed (formerly 3.0% / year)
  • Deferred Retirement Option Program (DROP) participants earn only 1.3% instead of 6.5% APY on deferred benefits

These 2011 changes continue today despite booming stock market returns. Although they did not affect employees who retired before July 1, 2011, employees who started after this date are fully affected by all of the above, and existing employees are still affected by the inflation adjustment removal for work credits earned after July 1, 2011, as well as having to contribute 3% of salary. There are 643,333 working members in FRS as of June 30, 2018, and 1,210,795 total members including retirees and terminated members who can expect benefits in retirement. These include teachers and other public employees such as police officers, city and county workers, higher education, et cetera, although school districts are the largest component of active membership with 314,001 members (49%). (Source: Comprehensive Annual Financial Reports)

There was a time before the Great Recession where the FRS was more than 100% funded even with the previous, more generous benefits. For it to be 84% funded now is quite good compared with pension systems in other states, but still wanting considering we are potentially at the apex of a 10-year economic expansion. As with most pension plans, the majority of FRS assets (80%) are in high-risk assets such as stocks, real estate, and private equity. Although these risky assets are advisable to invest in as growth will be higher in the long run as compared with safe assets like U.S. Treasury bonds, near-term risks are high. If there is another recession the FRS pension trust fund might go from 84% to 60% funded. The 2011 devaluation was used as an opportunity for the state to contribute less—if they would have kept up their contribution levels the trust fund would be over 100% funded now. For example, the 3% payroll deduction was taken as an opportunity for state and local governments to reduce their contribution rates.

Like life insurance, a pension plan puts a metaphorical bounty on members’ heads. Financially, the best thing that can happen to a life insurance company is for all policyholders to outlive their policies’ end dates; the best thing that can happen to a pension fund is for everyone to die off before receiving benefits. With a defined-contribution retirement account like a 401(k), assets pass to a spouse or children at death, but pension benefits do not generally function like this (although survivor benefits may be offered, they are usually small in comparison). Of course, the state is not going to go on a killing spree to save on pension costs, but conceptually the perverse incentives created by a lifetime payment scheme are entertaining to ponder.

With Social Security benefits, Americans are directly presented with a macabre choice—deciding whether to receive benefits at 62, 67, or 70. Waiting until 67 or 70 results in higher total payouts if one lives to about 83 or older. Of course, someone who is delaying to 70 who ends up dying at 69 would have been better served by starting the payouts at age 62. This is basically the vesting problem in reverse. The FRS, like many pension plans, requires workers to attain eight years of service to get a pension benefit; otherwise, the employee’s contributions (3% of salary) are refunded with no interest and the pension fund retains the employer portion of contributions. However, the FRS is unusual for offering a choice between a 401(k)-like plan and a pension, which must be selected within the first few months of employment. The 401(k)-like plan, called the FRS investment plan, vests the employer’s 3.3% salary contribution after only one year instead of eight. Predicting how long one will work for the State of Florida is not easy, and not fully in the employee’s control—what if they are fired with cause or terminated due to a recession?

In the private sector, we see the bounty effect result in employer malfeasance in smaller ways. The employer match to a 401(k) plan typically takes a few years to vest; employers are incentivized to terminate employees before reaching this milestone in order to claw back the benefits. Other benefits, such as vacation time and health insurance, are only offered after one year of service at many employers, with employee turnover serving to make these benefits useful to only a small percentage of hires, and rationales for firing employees mysteriously spike as they close in on attaining costly perks. Indeed, the customer-facing space is no exception; consider my continuing crusade against Amazon, a company that encourages customers to pre-pay purchases by attaining a gift card balance, perversely incentivizing the company to ban customers and steal gift card balances to maximize free cash flow. The larger your Amazon account’s gift card balance, the higher the probability of you being banned. This happens with credit card reward programs, frequent flyer miles, hotel points, and in many other areas, both via theft or forfeiture, hoops to jump through to redeem one’s benefits, and by devaluation of existing balances.

Devaluations of benefits occur within the broader context of fiat currencies. The U.S. dollar loses value continuously, with the Federal Reserve aiming for a 2% increase in consumer prices each year. Anyone with substantial debts, particularly if they are locked into a low interest rate such as a fixed-rate mortgage, should cheer inflation as it reduces their debts in real terms. With the 2011 removal of a 3% annual inflation adjustment from FRS benefits, current members must consider the U.S. dollar’s performance if they seek to forecast purchasing power in and during retirement. We could have several decades of 2% inflation per year, or there could be years like 1979–1981 which had more than 10% inflation per year. If high inflation occurs, FRS members’ benefits decline substantially in real terms, although they remain flat in nominal dollars. Even during retirement, this has large costs.

Many people misconceptualize retirement as a singular moment where one cashes in their poker chips and leaves the casino, but in fact it is a long slog with unknowable costs and pitfalls (many of them health related), and a need for risk-taking. Target-date retirement funds don’t go to 0% stock allocation when one retires; they typically stay around 40–50% for continued potential for portfolio growth as retirement could last 30 years or even longer. Another large unknown that may appear unrelated, but in fact is intensely relevant, is climate change. Planet-wide, humans are continuing their suicide mission to boil themselves alive. We have no idea whether risky assets such as corporate stocks and real estate will continue their growth trajectories as the climate crisis worsens, and this will be coupled with personal costs unrelated to one’s retirement portfolio.

This concludes my two-part series on the FRS and retirement saving, but expect more writing from me on similar topics in the months to come.

Writing on finance, education, et cetera