Inside Flyer‘s October cover story (ungated) is on monster shopping portal mileage deals that didn’t work out for members.
They were all deals that on many levels were ‘too good to be true’ but that at the same time shed light on the workings of the mileage malls which are very poorly understood — by design of the airlines and those outsourced companies running the shopping portals — and shed light on some of the questionable practices of those vendors, with at least tacit approval of the mileage programs.
In August I wrote about what could have been the biggest mileage bonanza ever: an offer on the US Airways and Hawaiian Airlines shopping portal sites to earn miles for transactions with web hosting company EasyCGI. The offers were very explicit that there were no restrictions whatsoever, any transaction qualified for miles.
When it came time for the miles to post, however, the whole thing fell apart.
It turns out that the US Airways shopping portal is contracted with Skymall. But Skymall outsources it to a company called FreeCause, which also runs the Hawaiian Airlines shopping portal. And FreeCause seems to have made an error in judgment in posting the offer.
See, they had an arrangement with EasyCGI to earn commissions on new web hosting accounts. But they posted their offer on the US Airways shopping portal as providing miles for any transaction. Members saw and responded to the shopping portal offer, spending money and believing they’d get miles based on the offer as-posted, unaware of the terms of the EasyCGI agreement with FreeCause stating that FreeCause wouldn’t get paid commissions on any offer. And mileage members aren’t party to that EasyCGI agreement with FreeCause — they don’t know about it and can hardly be bound by it. Instead members saw an offer and made purchases, oblivious to the fact that they were even dealing with a company called FreeCause, let alone that they would only get miles if FreeCause got paid commissions, regardless of what FreeCause promised on the US Airways Skymall shopping site.
While I haven’t seen the specific documents between FreeCause and EasyCGI, it’s not even obvious that FreeCause was acting properly under the terms of their agreement to offer any miles in exchange for commission-earning activities with EasyCGI.
And since FreeCause didn’t get paid, they refused to award miles. Ultimately I understand that consumers were refunded the money for their purchases, but FreeCause claims to have no liability based on EasyCGI’s terms which consumers were unaware of and which apparently FreeCause misrepresented on the shopping portal.
Now, the offer itself amounted to an opportunity to buy US Airways miles at less than a tenth of a penny a point, so was probably ‘too good to be true’ (though several other offers that have seemed too good to be true over time have been perfectly legitimate and rewarding).
But before this debacle, an offer I wasn’t aware of at the time and didn’t participate in, I was completely unaware of the complex nature of the shopping portals. Or the ‘buyer beware’ stance that they would take with their customers.
The Inside Flyer article includes this blog post in full which I wrote on the workings of the mileage mall, how opaque it is, how members really don’t even know whom they’re dealing with.
FreeCause made consumers an offer thinking it would get affiliate commissions, whether based on EasyCGI’s terms or not. EasyCGI 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 whether they can get money from EasyCGI or whether they can blow off mileage mall shopping consumers. And they don’t know yet which strategy is more likely to succeed, so consumers just have to 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? Since it was American AAdvantage, I had no concern whatsoever giving them my frequent flyer number 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.
Also in August, the American Airlines shopping portal — not run by American Airline AAdvantage but by a company called Cartera Commerce — posted an offer for about 83,000 miles in exchange for any transaction through the Verizon Wireless store.
A bit of an obvious error, that. Members could buy items less than $5 and earn over 80,000 miles? The economics clearly wouldn’t work out. And Cartera Commerce didn’t honor it, instead offering that customers take refunds for their products and awarding compensation of 2500 miles immediately and 2500 more miles for making an additional purchase through the shopping portal within a month. So members taking advantage of this offer certainly came out ahead.
But what’s interesting is that (1) Members were contacted by Cartera Commerce, they weren’t at all dealing with American AAdvantage, despite shopping through the AAdvantage portal, and (2) that Cartera Commerce cited Verizon’s rules which weren’t immediately obvious to the purchaser when shopping the site, saying that only new wireless plans earned miles — a claim directly contradicted by the very offer being made on the site, which was that specific items would earn large quantities of miles.
Taken literally, the position offered by both FreeCause and by Cartera Commerce is that members dealing with them are subject to the terms and conditions of merchants, terms and conditions that they aren’t a party to and are likely unaware of, and if the shopping portal does something contrary to those terms and conditions then it’s the member who gets nothing.
And to the extreme, a shopping portal could put out an offer intentionally, the member could follow instructions to the letter, and the shopping portal doesn’t consider itself obligated to anything if the offer they made doesn’t conform to the terms and conditions that the portal agreed to with the merchant.
All of this is being done in the name of the mileage program.
Using the US Airways Dividend Miles or American AAdvantage name, a third party company markets to a large database of members. Member shopping earns that company a commission, and that company buys miles from the program to award to the member. All the while, the member thinks they are dealing with their mileage program, but the mileage program isn’t really involved — it’s just their name that is being used, and the third party is just buying miles from them.
These things can go wrong even when the offers aren’t as obviously mistakes, Cartera Commerce also manages the Delta Skymiles shopping portal and at the same time offered 2300 Delta miles for any Verizon transaction, something which is much more in line with the sorts of offers one usually sees. But they didn’t honor that one either, instead offering compensation of 500 miles.
Finally, the Inside Flyer piece goes into detail on the current United “Months of Miles” offer which allowed explicitly unlimited bonus miles for partner transactions — and then after the promo was released, they retroactively changed the terms and conditions of the offer to cap the bonus at 25,000 miles per member. Ultimately they agreed to honor bonus miles earned over 25,000 prior to the introduction of that threshold.
These programs can be lucrative, offering rebates for shopping that you’ll do anyway, you’re better off going through a shopping portal (or cashback site) than not going through one in most cases. But they are anything but transparent, you aren’t dealing with your favorite mileage program even though you think you are, and given the small margins involved you can’t really expect good customer service from these programs.