A week ago I posted about the most lucrative mileage offer ever made, the trouble in having the vendor honor the terms of the offer, and what it means about airline ‘mileage mall’ shopping portals.
As far as these things go, I’m relatively savvy, there are likely others who understand details better than I do but I’m reasonably well-informed relative to the average consumer. And the more I think about the proposition being offered, the more I realize I knew very little at all about how things worked or whom I was even dealing with.
Some may recall the details of the offer: any transaction through the US Airways or Hawaiian Airlines mileage malls with web hosting company EasyCGI earned miles. But it turns out that these weren’t offers from US Airways, Hawaiian Airlines, or even EasyCGI at all. Rather, airlines sell the rights to be their ‘mileage mall’ partner to third party vendors. Those vendors sign up for referral commission arrangements with stores. They get paid for the business they drive towards those stores or vendors. They take those commissions and rebate part of them back to consumers in the form of miles, which they buy from the frequent flyer programs. When you buy something from the US Airways shopping portal you may be dealing with Skymall or a company called FreeCause, not US Airways!
When the mileage offer went south, EasyCGI said they didn’t know anything about a mileage mall offer. And they probably didn’t make a mileage mall offer themselves, rather they had affiliate agreements. So they ‘blamed a rogue affiliate’ and said they weren’t responsible.
But — and this is me specualting here, the more I think about it — I’d bet that FreeCause, which seems to manage the technology for the US Airways mileage mall — is the ‘rogue affiliate’ which isn’t really rogue at all.
FreeCause signs up for an affiliate arrangement with EasyCGI. FreeCause offers miles in exchange for taking EasyCGI up on its offer. EasyCGI – rightly – says WE didn’t sign up for mileage malls. Rather, they offered to pay affiliate commissions.
But now they won’t pay, either because they didn’t foresee how the details of their commission arrangement would be used or because FreeCause misunderstood the terms on which it would be paid and made an error in judgment in its offer.
EasyCGI won’t pay FreeCause so FreeCause won’t pay US Airways for the miles they need in order to reward consumers who took them up on their offer..
FreeCause made consumers an offer thinking it would get affiliate commissions, whether based on EasyCGI’s terms or not Easy CGI won’t pay, so FreeCause gets no cash and therefore they do not wish to pay.
That’s my sense of what’s going on. FreeCause is supposed to be buying the miles but only wants to do so when they get paid by EasyCGI, who doesn’t want to pay.
None of this is transparent to consumers, who see an offer and follow it, thinking that’s the end of the story.
Now FreeCause is trying to figure out either whether they can get money from EasyCGI or whether they can blow mileage mall shopping consumers off. And they don’t know yet which strategy is more likely to succeed, so consumers just wait to hear something.
I admit, I never really understood the relationships involved here before. In fact I remember wondering why I had to create an online account for AAdvantage eShopping when I already had an AAdvantage account! After all, shouldn’t my AAdvantage account just work for the shopping portal? But after all, since this is American AAdvantage after all, I had no concern whatsoever giving them my frequent flyer # and using the same password for both!
I mean, I understood the affiliate relationship – but I just assumed the programs ran those, they get paid by the merchants and rebate part of the commission in miles. I didn’t really ‘get’ the third party involvement. And if it’s not transparent to me then what are the odds the average consumer understands who they are even transacting with? And I wasn’t even in on this deal.
These offers can be good, they can be lucrative, goodness knows I’ve been using them for years. But it’s odd to learn that I didn’t even understand how the whole thing worked, whom I was dealing with, or why it was sometimes so hard to get the miles I believed I had earned.