Give me a beak. What is Chase's damage? How are they harmed? They get their annual fee and merchant commission and you get the points.
(Emphasis added.)
I think you pose a good question. I didn't specify what I meant by "fraud", but it is certainly true at common law that in order to prevail in a lawsuit seeking damages for fraud, one must be able to prove damages. See, e.g.,
Engalla v. Permanente Medical Group,
15 Cal 4th 951, 974 (1997) (noting that in a suit seeking damages for fraud, there is a "requirement to show pecuniary damages"). A similar requirement may also apply to analogous criminal offenses.
That said, it seems like in the case of a typical "credit card churner", Chase is likely to be losing money from a business credit card account that was fraudulently obtained and used.
To take the example of the Chase Ink Plus, there is currently a bonus offer for 60,000 points after $5,000 spend, with a $95 annual fee. In addition, the card offers between 1 to 5 points per dollar spent. Let's say a savvy point-maximiser chooses to spend only at places that yield the 5 points per dollar in order to meet the $5,000 spend. After spending $5,000 and otherwise meeting all of the offer terms, this person will have racked up 85,000 points. This person then transfers the 85,000 points to their Chase Sapphire Reserve account and redeems the points for flights at 1.5 cent per point, yielding a total redemption value of $1,275. Net of the $95 annual fee, the value gained is $1,180.
In order for Chase to have covered this $1,180 through commissions, it must be collecting a 23.6% commission on all purchases, which seems unlikely.
You may argue that Chase is saving money in other ways such as perhaps buying flights in bulk, but that probably balances out with the other costs to Chase that you ignored, such as the fact that it costs Chase money to provide service on the account, dealing with phone calls and whatnot. Also, even the application process itself may cost Chase money because a common method of bypassing the 5/24 rule is to apply with a pre-approved offer in branch, which of course takes up a banker's time as well. Chase may also pay the banker a commission for the signup. There's also the cost of printing copies of account agreements to mail out, the cost of printing the card, the cost of postage, and other incidentals.
Again, I express no view on whether any participant in this thread has been engaging in fraud.
