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Update:
I called Costco to ask if this was legit. I got the answer and this is indeed an above board transaction. However, it is totally goofey.
Costco won't accept a cashiers check for the flooring work. However, they will accept a cashiers check to purchase gift cards. Therefore, they sell the contractor $20k worth of gift cards and then he pays for the flooring job with the gift cards. Costco confirmed with me that this was correct and they had the contractor call me to follow up with the explanation. The contractor stated he was not aware of this until this particular transaction because most people pay with a credit card.
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