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.

  1. Dan said,

    So, I gotta ask:

    Is this arrangement even legal? The premise of basic contract law is that there must be a meeting of the minds. If I’m being lead to believe that I am transacting with party A, but in reality, I am transacting with party B, is it legal?

  2. Alan said,

    I’m sure it’s legal, but if it’s legal then there’s got to be someone on the hook for the payout to the end customer. Seems like FreeCause has some problems with it’s affiliate agreement, if EasyCGI is not required to pay up for services rendered then FreeCause has problems. And if FreeCause had their contracts worded correctly it would seem that EasyCGI is on the hook for the miles owed, even if it WAS a mistake. But this all hinges on whether or not the contract spelled out who was responsible for what.

    In the end the airline is the one on trial, it’s their name, after all. The airline needs to put pressure on FreeCause to sort out the mess and the airline needs to make it right to the customer and then figure out what that means to FreeCause. It might mean that FreeCause ponies up the money for the miles. Or it might mean that the airline severs their agreement with FreeCause. Put that kind of pressure on FreeCause and it’ll get worked out, but the airline is the only one that can apply that pressure. Unless there are legal paths to pursue, and that’s a whole different discussion…

  3. HA Skymall Offer Not Honored? - FlyerTalk Forums said,

    [...] Wow, this blog from Gary Leff has given me pause for thought about the possible less than objective role that Freecause might be playing in this drama. As I am not as savvy as Gary or mileage mall mavens, I can't really comment about Gary's speculation, but maybe others who understand the mileage mall/affiliate working relationship can weigh in! http://boardingarea.com/viewfr…ause/#comments [...]

  4. beaubo said,

    Wow, am I naive or what.

    USAir advised me that FreeCause was a subcontractor of their mileage mall, responsible for technology and the affiliate manager.

    I assumed (MY BAD!!) that an affiliate manager would ‘manage’ all of the affiliate offers, NOT be an active affiliate themselves, recruiting vendor deals and structuring mileage bonuses. While I recognize that Gary was clear that he was only speculating, it now seems perplexing that FreeCause would be the lead party in investigating our mileage claim with with EasyCGI, when its possible that they could be far from a disinterested party.

    Well, the FreeCause President advised yesterday that after 7 weeks, they still don’t have any clarity about resolving our claim. But we were advised to stay tuned until next week.

  5. Gene said,

    @beaubo — I knew you had to be in on this one! How many miles do you stand to earn?

  6. HikerT said,

    Web hosts typically pay a referral commission only for paid annual subscriptions, not one month of hosting. Also, referrals would typically only be paid for a unique new customer. If the web host discovered a referrer sending bogus “new” customers or customers who are only signing up to get the referral bonus and then canceling, they would generally deny the commission. In short, these kind of signups are a huge YMMV. I think it’s disingenuous for anyone to game the system and cry foul when the referral doesn’t get paid. FWIW, I’ve done my fair share of these type of signups. Some work, some don’t. One generated close to 100K miles for me and didn’t cost a cent. Did I go crying to the airline when miles didn’t post? Heck no! I wonder how many people would be whimpering to AA about the Verizon deal if the AA shut down accounts for attempts to capitalize on an obvious errors followed up by disingenuous complaints that border on fraud? This is not necessarily directed at Gary. I appreciate the article, but I say be happy with the miles you got and move on instead of looking for a scapegoat to blame.

  7. Gary said,

    @Hiker T to be clear I was not involved in this offer in any way, I did not even know about it at the time. It just really made me aware of the actual structure of the mileage mall offers in a way I hadn’t been before. For what it’s worth, I do understand that the terms and conditions of the offer in question didn’t require new customers, new signups, lengthy contracts or anything else. Perhaps they should have, but they didn’t. The offer was made in more than one place/on more than one shopping portal. And it’s been months, no one has yet even said that it isn’t/wasn’t valid. So while you raise reasonable points about how these offers frequently work, I’m sympathetic to the argument that ut’s not how this one was presented at all. No dog in this hunt personally, though.

  8. Reid said,

    It truly is a great scheme. Its built to make it so that if its profitable, the miles are issued. But if its NOT, there is no one you can ACTUALLY point a finger at, at least as far as they are concerned. Everyone has done their ‘legal obligation’, and meanwhile the customer gets screwed. This is BIG business, and thought was put into these arrangements.

  9. Sagy said,

    Seems like we have a logical explanation for what might have happened, but as other have said, why should the consumer that followed all the requirements will be the one that if left with nothing?

  10. al613 said,

    I was not aware of this particular offer, but I’ve got a lot of miles through bookingbuddy offer. I was dealing with freecause to get the miles and got all what was owed. I cannot believe that BB paid freecause anything close to what they spent on these miles.

  11. HikerT said,

    Gary, like I said, my comments were not directed to you but rather those e.g. singing up for a hosting account to skim referral bonuses and then crying foul when the web host paying those commissions caught on to the game and denied the bonuses. In the case of easy CGI the vendor actually refunded everyone’s money so nobody got screwed. I think it’s disingenuous for anyone to expect more back than they paid for here. In the case of the AA offer, it really disappoints me to see some bloggers going so far as to make statements like “If American can’t or won’t step up to bat with this, I have made my last purchase on their shopping mall.” I’d loved to have seen more bloggers calling it like it was: an obvious error that everyone knew was an error going in with intent to extort compensation after the fact.

  12. Rick i said,

    As the blogger that made that statement, I can and certainly will make the statement again. If it is called the AA eShopping Mall any reasonable individual would expect to be dealing with American Airlines. If your name is on the door and you are profiting by having your name there, then you are ultimately responsible for what goes in in your mall.

    And quite frankly I’m disappointed if our group of travel crazies continues to support sites with this type of back door dealings and passing the buck. I will not use these malls again until there is someone that accepts responsibility for the operation. And quite frankly if I never see my 83k miles or if they pay me for each purchase I made, my days with these clowns are done. ” And that is My personal choice.

  13. Steve K said,

    You have to look up the term “privity of contract” “A” is a manufacturer who sells in bulk to “B” a warehouseer. “C” contracts with the warehouse for delivery of some subset of its inventory.

    C can make contract claims against B, but not A

    Freshman contracts law.

    Another example, you park at the Marriott (or Hilton, etc) and get a stub that says Marriott Parking and even has the hotel logo and bills via your room folio. Your car is damaged in the lot. You get to go after Marriott Parking (a separate corporation) not the Marriott hotel.

    The fact that it says AA Shopping mall does not make AA responsible. This is LAW, not LOGIC class.

  14. worldtraveller2 said,

    Guys
    Health insurance companies have been doing this for years. You buy a BCBS policy, yet they contract with ASHN (a slash and burn 3rd party payor with a crappy reputation, so while Blue Cross Blue Shield (AA) gets to keep their lovely reputation, ASHN is slashing your claims right and left. 3rd party payors are a SCAM. You never get what you would if BCBS was paying the bill.
    This is coming from the DR. WORLD TRAVELLER2!

  15. beaubo said,

    If it turns out that FreeCause is indeed BOTH the mileage mall customer service contact that HA/US referred us to, YET FreeCause has a fiduciary interest as an actual affiliate itself. How is it reasonable for FreeCause to be an honest broker in resolving issues like ours, when they in effect, have skin in the game?

    ‘Dear xxxxx,

    Thank you for contacting The Dividend Miles Toolbar & Mall Support.

    Please be advised that we have escalated your concern to our Reporting Department for the Deducted Miles to be posted back. As soon as the postback appears on your account for this missing transaction, all miles will be reinstated and be valid for another 18 months.

    We will contact you via email to advise you of the outcome.

    Thank you for your patience regarding this matter.

    Best Regards,

    The Dividend Miles Toolbar & Mall Support Team

    usairways.skymall.com

    dividendmilesmall@freecause.com

    Tel: 1-888-238-8495′

    AND

    ‘Aloha XXXXX,

    Thank you for your inquiry to Hawaiianair.com.

    For faster service, please contact the partner directly to verify the mileage activity on your account.

    Please contact our HawaiianMiles Service Center at 1-877-426-4537, (toll free) during business hours, 8:00 a.m. to 4:30 p.m. Hawaii Standard Time, Monday through Friday for agent for further inquiry / assistance.

    Mahalo,
    So I called, go a nice lady….. She put me on hold for a few minutes and when she got back said that they don’t have a number for EasyCGI, but she can give me a number to call. The number that she gave me is a FreeCause customer service number.’

    FreeCause has represented to us that they have been ‘investigating’ our denial of mileage earning for going on 8 weeks. If in fact, they are the affiliate that is not getting paid by the vendor because of their ‘unauthorized’ mileage mall offer, what/who, pray tell, has FreeCause been ‘investigating’ all this time, when it appears they are in fact the culpable party???

  16. beaubo said,

    Wandering Aramean chimes in..

    http://boardingarea.com/thewa…the-problem-with-online-miles-malls/#comments

  17. My Strategy for 100,000 Bonus Miles in the US Airways Grand Slam Promo - View from the Wing said,

    [...] squarely in my sights. You’d think I would need only two more than my current list, then, but I don’t always trust the online shopping portals and though I track all of my activity in a spreadsheet and can follow up to make sure that things [...]

  18. Are Credit Card/Airline Miles for Suckers? | My Life, My Business said,

    [...] Hawaiian Airlines / US Airways mileage mall offers for EasyCGI hosting quickly turned into a he-said-she-said fiasco, and few people actually got the promised airline miles. [...]

  19. Frequent Flyers Sue US Airways and Hawaiian Airlines Over 200 Million Miles Uncredited From Shopping Portal Transactions - View from the Wing said,

    [...] The whole affair — and I didn’t know about the deal at the time, so wasn’t involved — made me think about the ‘mileage mall’ shopping portal in a totally different way. [...]

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