Mint News Blog

News, Information, and Commentary on US Mint Products

Monday, July 25, 2011

US Mint Changes Direct Ship Program


Effective July 22, 2011, the United States Mint made a major change to the Circulating $1 Coin Direct Ship Program. The coins may no longer be ordered with a credit card, but instead must be paid for by check, money order, or bank wire.

The Direct Ship Program allows individuals and small businesses to order quantities of $1 coins directly from the United States Mint at face value with no charge for delivery. The program was created in order to make the coins more readily available to the public for the purpose of introducing them into circulation.

Some individuals abused the program by ordering massive quantities of the coins with their credit card and then immediately depositing the coins ordered at their bank. This allowed credit card miles, cash back, or other rewards to be accrued at zero actual cost.

The abuses were first widely reported in late 2009. At that point, the US Mint tried to deal with the issue by indicating that rewards could not be earned through such a purchase. One article even included a quote from a Mint representative, stating that the purchases would be charged as a cash advance. Apparently, the US Mint was unable to do this, and the purchases continued to be charged as normal purchases which accrued rewards.

Other steps taken by the US Mint were to disallow purchases from some of the biggest abusers of the program and call individuals who placed large orders. Eventually, the Mint introduced ordering limits and included statements on the relevant product pages indicating that by placing an order, the customer would agree to adhere to the intention of the program. Although these steps likely cut down on some abuses, they could not prevent it completely.

Earlier this month, an article from NPR told about individuals who continued to abuse the program. This was followed by other similar articles in other mainstream publications. To make matters worse, a report was recently issued by the Federal Reserve Board of Governors, estimating that 60% of the coins ordered through Direct Ship were eventually sent back to the Federal Reserve Banks.

The US Mint's statement explaining the reason for the change to Direct Ship seems to acknowledge the recent articles and the report.
The Mint has determined that this policy change is prudent due to ongoing activity by individuals purchasing $1 coins with credit cards, accumulating frequent flyer miles, and then returning coins to local banks. Local banks, in turn, returned coins to the Federal Reserve. While not illegal, this activity was a clear abuse and misuse of the program.
During the 2009 fiscal year, the US Mint reported distributing 85.2 million coins through the Direct Ship Program. The total number distributed for the 2010 fiscal year was 90.7 million. Figures are not known for the 2011 fiscal year, which will end September 30, 2011.

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