How would you launder money with starbucks cards? Sure, you can transfer balances with them, but that alone doesn't help you launder money.
According to the treasury dept:
>First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean".
I don't see how starbucks cards can be used in any of those steps.
>If you can fill one with stolen CC details and then either cash out in a store or sell for a discount, that's a pretty basic launder, no?
that just sounds like credit card fraud and fencing[1]. if you replaced starbucks card with something else that's valuable (eg. beats headphones), would you still call it money laundering?
Being able to cash out a gift card seems like an interesting way to get a cash advance on your credit card, without paying cash advance fees. Surely the credit card companies are on to this, and prevent it somehow?
There's a list of goods[1] that are classified as "cash-like" and are treated like cash advances when you purchase them. They don't really try too hard to crack down on this though, because there's little point. After all, you can always get a cash advance for free by going into a store and offer to pay for someone's purchase in exchange for cash (and a little discount).
I'm not sure how many jurisdictions force them to allow cashing out. If I recall correctly California law says they have to, but only for relatively low value ($10 or $5 ?) so not sure how effective that is. So I doubt the CC companies are too concerned.
Of course if you are selling them below face value and it wasn't your card, its a different calculus.
>then sell the gift cards for "clean" money at a discount from face value.
This seems to be a misconception about how money laundering works. The "cleaness" of money isn't an attribute of the bill (unless you robbed a bank and they recorded the serial numbers), it's whether you can plausibly say it originated from a legitimate source. Taking dirty money, buying starbucks gift cards with them, and reselling them doesn't help you prove you got the money legitimately.
If you sell them, you still end up with cash, and any transaction records isn't going to help you. "Oh, you got this money from selling starbucks cards? Can you explain where you got $10000 worth of pre-activated starbucks cards?"
The model of a laundromat is a cash based business with high margins. You'd "buy" $10000 worth of widgets from yourself, buy $1000 worth of "materials", dump/trash those materials (so they don't pile up), then claim $9000 of profit as "clean" money.
> They can also be used for money laundering, as a result.
Story time:
So, back in 2009, I'd just started working at Starbucks and my first job was to figure out some reporting discrepancies in online purchases of Starbucks cards. Basically, a report from the database on how many $$ of cards we'd sold didn't seem to match up with a transaction volume report from our credit card processor. And, as the new guy, I got stuck digging through stacks of classic ASP, layers of SQL Server stored procedures, and even some really old mainframe that I can't remember the model of. It was important to the business to figure out why these reports didn't match up, but it wasn't exactly a fun assignment that engineers were leaping onto.
Anyway, I eventually figured out that it wasn't a reporting error— we were truly "selling" more $$ in Starbucks cards than we were charging for. I dug through the whole process to see how this was possible, and found what it is still one of the most hilarious bugs I've found in my career.
When you got to the checkout form to buy a Starbucks card in any denomination, you had to fill out your credit card information. If anything you filled out didn't validate or we couldn't authorize your card, you would get an error message. It would ask you to correct the credit card information and resubmit the form. But, crucially, you didn't actually have to correct the information. You could just resubmit the form with anything you wanted, and some spaghetti logic determined that since validation & credit card auth had already been run once, it didn't have to be run again! Instead, we just created an order to ship you the product and didn't bother charging your card at all.
This bug was "leaking" probably over $100K in cards each year, for who knows how long. I still wonder if anyone actually figured it out and was exploiting it. It wasn't even "laundering" money, it was wholesale minting it.
The best part was a few weeks later, long after we'd fixed the bug. Someone from the IT security team showed up at my manager's desk with a lot of questions and pretty ready to walk "the new guy" out, and possibly press charges.
Turns out, while I was troubleshooting the bug, I'd accidentally submitted some absurd order. Something like 100 Starbucks cards, each loaded with $200 or whatever the maximum was. I guess I'd submitted it in production instead of the QA environment, and because of this bug, the order had actually gone through without charging me. It was a large enough order that it triggered a manual audit, and someone was pretty sure that I was just stealing from the company.
Talking them down was fun times, since they were pretty serious about the whole thing while my whole team was just cracking up :)
