Is using empty debit/virtual card to avoid potential cancellation fees a fraud in U.S.?

Question

In Travel.SE there are often questions about cancellation fees and how can they be enforced in case of using an empty debit or virtual credit card for the booking.

Does this qualify as fraud or other crime / misdemeanor in the U.S.? As I understand, fraud is an attempt to get some goods or services without paying for them (or without paying a full price), but in that scenario, a payment method is chosen to avoid paying cancellation fees in case of no show, so the intent of not paying what is due is present, but no transfer of goods or services will be present.

Answer 1

Promises are good consideration

Indeed, all contracts that are not completed by formation (like you buying a chocolate bar from a shop for cash) involve promises as consideration.

When you book a seat for transport or a room for accommodation, what you are receiving is the promise that the thing you book will be available at the time you booked it. The airline is not just providing an airline seat from Sydney to Dallas; they are also providing the promise that it will be there waiting for you. At the same time, you are providing a promise that you will pay what you agreed.

At common law, if the thing you wanted is available (i.e. they have fulfilled their promise), you are liable for the full price irrespective of if you avail yourself of it or not. A lower cancelation fee is a concession by the supplier that they will accept a lower price if you don’t use it.

This is fraud

new-south-wales

(1) A person who, by any deception, dishonestly--

(a) obtains property belonging to another, or

(b) obtains any financial advantage or causes any financial disadvantage,

is guilty of the offence of fraud.

There is a deception (the credit card is no good), it’s proffered dishonesty, and it causes financial disadvantage.

Answer 2

There's a critical error in your argument

but no transfer of goods or services will be present.

Actually: No, there is a transfer of service made by booking: resources are put aside by the service provider to be available for the booking person once they arrive. That is a service. These resources are not available to be sold otherwise: a room is booked and thus blocked from being rented to someone else, or a seat on the plane is booked and not offered to others, and so on.

As long as the booking person arrives, no damage happens. However, if they no-show, there is damage: the resources go to waste unused: the room stays empty, or the plane flies with one less person. And the cancellation/no-show fees that are contractually obligated to make the damaged party whole (to compensate for the wasted resources) are also not paid.

Knowingly using a fake credit card number or empty debit card that can't pay the fees and planning not to show up would be clearly fraud. One such paragraph that might be used to hunt down could be 18 USC §1341 - aka "mail fraud" - or much more likely, 18 USC $1343 - wire fraud. The latter is because any fraud on the internet is wire fraud.

Whoever, having devised or intending to devise any scheme or artifice to defraud [including a scheme or artifice to deprive another of the intangible right of honest services], or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.