Jason Alvarez2 said:Could you elaborate on how this credit arrangement actually works?
Basically, after how long can the lender expect to see their ten thousand bucks?
Here is the breakdown; there are three players involved:
- Matt, who is looking for credit
- Steve, who acts as the organizer
- George, who owns the retail shop
Let's say Matt has a Visa card, and George has an agreement with Diners Club allowing him to sell merchandise on a 12-month installment plan. Through Steve, Matt goes to George’s store. George takes his transaction slips and records that he sold goods worth $3.25, even though he hands Matt exactly $2667 in cash.
Matt then proceeds to pay off his credit card provider as if he had legitimately purchased goods totaling $3.25 on credit. The excess inventory from this fictitious sale is then offloaded to someone working under the table—say, a contractor who doesn't care about official receipts—while Steve and George split the profit.
George receives his $10,000 the following month, once the credit card processor settles the account. Naturally, the bank charges Matt interest on the installment plan, so Matt ends up paying more than he originally took.
The New York Post covered this in detail.