Would it be illegal or just bad ethics if a director got fully reimbursed for an Association expense paid on personal CC that earned cash back?

Would this be illegal or only bad manners:

A director pays for an association expense with a personal credit card, that gives that person cash back on purchases, but gets reimbursed for the full amount. For example $1000 purchase using a personal credit card for a legitimate association purchase, gets $25 cash back on that purchase, and the association reimburses that director the full $1000 which means that director made $25 personally.

The HOA is NOT reimbursing for the benefit. Just the cost they expended. So why would that be illegal or unethical? Someone doesn't like the director and wants to make it a thing?

What Melissa and Henry said.

The director didn't go into this trying to make a profit - an association expense had to be paid, the director paid it and got reimbursed, which was appropriate. His or her agreement or incentive with the credit card company is none of your business.

You might have an issue if no received presented or the director didn't receive authorization to pay the expense. There are other things board members do that warrant a look but this isn't it. Calm down and carry on.

It might seem petty but the director has a credit card issued to the association that director could have used instead. I see it as somewhat similar to the situation that a director gets a kick-back from a contractor - the director is getting money for purchasing something for the association in both cases. One is indirect, via payment method choice by choosing personal credit card over association issued one, and for less money while the other would be more money likely and more direct, but in both cases the director is making money for association purchases.

-- Then the director should be using this credit card instead, so the association enjoys any cash refund from the credit card company.

-- The $25 cash back on $1000 is a 2.5% rate. I am not seeing any credit card company offering such a high rate (on non-food items) except for introductory periods. Where'd you pull this number from? Is it just the highest you think would make this thread believable? Because it is falling flat for me.

-- How often are large purchases even occurring?

-- I am not wild about a board having to expend time and energy beyond reviewing a receipt for a HOA item that a director has submitted as an expense. The director should be using the HOA card, but whatever.

Not all associations have corporate credit cards (ours doesn't). These cards can be expensive, and it can save the association money if a director uses a personal card (or writes a check or pays cash) and then is reimbursed.

I mean, we don't complain if they write a personal check or pay cash, do we? It's their money in that case, too. And what happens if the director uses one of many payment apps that are popping up? Same thing.

And would we be complaining if the director shopped at some place with a loyalty program and was charged less as a result, which would benefit the association unjustly since it was the director who was entitled to this perk? This situation is equally "wrong".

I think people are making a mountain out of a molehill. As long as the director has an itemized receipt to turn in ** and the association would have been charged the same amount regardless of what payment method was used ** I say no harm no foul.

Higher rate or other charges for some type credit cards. Plus how do you split up the perks? Someone is going to want to use those options...

For honks and giggles, I looked up business cards that offer cash back, and found cash back amounts between varying up to 5%. However, they all charged an annual fee. (There is no free lunch, the credit card companies are in this business to make a profit.)

For occasional small purchases, a business credit card may not make financial sense since you'll pay to have the card regardless of whether you use it or not. And bigger purchases often involve bids and are paid by check out of operating funds.

Roger

If the use of the personal credit card is of sufficient concern, due to the optics or whatever, the matter is easily resolved by requiring that the Association credit card be used for association related expenditures. You could also throw in words to the effect charges placed on a personal card will not be reimbursed except when the personal card was used in the case of an emergency.

My wife and I are retired from a Fortune 10 corporation, we were issued company credit cards. We were forbidden to use the company card for personal expenditures, the ultimate penalty was termination. If you develop rules for the use of the association credit card, you may wish to consider a similar restriction on use.

I agree with the others, there is nothing wrong with it. If they have an HOA card they could use and they are using their personal card instead just to make a profit, then I would have an issue with it, but it still would not be illegal.

In our self-managed HOA it is not unusual for a board member to make a purchase and get reimbursed. It would not be worth the trouble to make the adjustment in the accounting software for the cashback of one to two percent. I would just consider it a very small benefit to the director for their trouble.

Looking at it from another angle, would you reimburse a director for interest if they did not pay off their credit card at the end of the month? Whether they pay interest or get cashback is a cost/benefit that is between them and their credit card company.

This. The avoidance of the appearance of anything improper or unethical should be the standard, not simply whether the Association itself incurs any loss that it otherwise would not have.

Only in the most unusual of circumstances should an Officer's personal finances intersect with Association business, and in such a circumstance, the resolution of it should be fully presented to the entire Board.

Stay out of the grey areas and no one gets tempted to take it even farther.