Loyalty Card Fraud Has Coffee Shops on Guard Against Caffeine Arbitrage

BOSTON.  To all appearances, Amy Vilsbeck is just another customer at Uncommon Grounds, a local purveyor of coffee and espresso drinks in the financial district here.  “I blend in pretty easily,” she says as she pretends to check her phone for text messages.  “There are a lot of young people like me who hate their jobs so much they’ll use any excuse to get out of the office.”


“The quiet types minding their own business?  They’re the worst!”

But in fact Vilsbeck is a plant, hired by the owners of the hole-in-the-wall shop, which uses customer “loyalty” cards that offer a free drink for every nine purchased in order to attract customers away from chains such as Starbucks and Dunkin Donuts.  “I enjoy the undercover nature of my work,” she says as she sips on a decaffeinated drink in order to avoid burn-out.  “I’ve been a file clerk and a receptionist, this is more like a spy movie.”


“You hold him, I’ll hit him.”

The young woman’s job is to spot and stop fraudulent use of loyalty or “rewards” cards, which eat into her employer’s bottom line.  “Say like a guy will buy nine small coffees,” says Tom Mattieson, who occupies a similar position at Boston Beans, a competitor.  “He shows up with nine holes punched on his card on Friday and all of a sudden his tastes have changed to a half caf/half de-caf soy macchiato caramel latte–there goes our profit,” he notes.  “I call that a rather perverted sense of loyalty.”

Financial regulators say such arbitrage from low to high-priced drinks is legal, but a growing source of concern on volatile futures markets.  “You have a lot of bottom feeders buying up cards with nine holes punched at deep discounts,” says Morton Shulman, head of the SEC’s Special Task Force on Small-Time Crooks Who Can’t Afford Good Lawyers to Beat Us.  “Then they go in and order these complicated drinks, causing wild swings in the time it takes me to get in and out with my regular coffee and corn muffins.”


“You found it on the street, did you?  Like I haven’t heard that one before.”

And so Vilsbeck and others like her are the first line of defense against a new crime wave on which sketchy characters surf, hoping to chisel coffee shop operators out of sums that can reach into three figures, if one counts the two to the right of the decimal point.  “We had a guy try to pull a fast one this morning, leveraging his crappy coffee purchases into a vanilla iced latte and even a biscotti,” she says with disgust.  “You don’t want to scar anybody permanently, but that’s apparently what Tasers are for.”

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