Gene Hackman to Tom Cruise in The Firm:
The difference between tax avoidance and tax evasion is (a) whatever the IRS says, (b) a smart lawyer, (c) 10 years in prison, (d) all of the above.
There are a lot of grey areas in miles and points, and those grey areas are largely the making of the programs themselves. They are large and complicated and the people who manage them don’t always understand or remember the rules they’ve created.
What Rules Are We Obliged to Follow and When is it Ok to Push the Envelope?
When it comes time to write terms and conditions for a promotion, they don’t always do a full and complete job thinking through the implications. US Airways Dividend Miles used to be notorious for sloppily written terms.
And so millions of people reading through the offers, a few of them are bound to hit on something, a bigger opportunity than the program intended.
Here’s the interesting thing — in recent times there’s been a shift in narrative coming from the programs, where they seem to frown on activities of members benefiting from programs in ways the program didn’t intend as opposed to complaining only about members who actually broke rules.
Don’t get me wrong — with more than 100 million members of American AAdvantage alone (including US Airways Dividend Miles members, and after de-duping accounts), there are plenty of people who do break rules, such as:
- People who sell miles or award tickets
- People who take advantage of IT glitches
There are things an airline might decide is a rule but where it’s far less clear. In the case of the recent Danish pricing mistake I had no issue with using a foreign website to buy tickets and to work around website limitations to process transactions.
The United website will default to your billing address country, an odd quirk. There is nothing wrong in my view in issuing tickets in whatever country you wish. I do this all the time with Expedia’s country-specific websites (eg their New Zealand, German, Spanish, Brazilian websites).
I don’t think United should have been expected to honor the fare if cancelled and communicated promptly — but I saw nothing wrong with working around systems limitations to get their website to complete a Danish point of sale transaction.
Not All Rules are Enforced
Then there are of course rules that are only ‘kind of sort of’ rules, a decade ago it was common for the terms on a credit card offer to say that the signup bonus was for first time cardmembers only but in practice banks would give those bonuses to the same customer more than once.
If a rule is buried in the fine print, and not actually enforced, can it be said in a meaningful and not purely technically way that a member is actually violating something?
If a program says a promotion is supposed to work one way, but over time members come to learn it works a completely different way in practice, are members supposed to pay attention only to the written rules rather than the common law ones?
At a certain point we understand a program’s actual practice as the rules, regardless of what they say in print.
When How Things Work in Practice is Too Generous
I have little problem with the grey areas that are created by complexity, with benefiting more than a program may have intended. Hyatt’s “Faster Free Nights” were one of the most generous promotions from a hotel loyalty program, ever. Two stays (at any paid rate) earned a free night at any Hyatt in the world. Two cheap airport stays could be redeemed for a night at the Park Hyatt Tokyo.
- Back in the day you used to have to pay with MasterCard to be eligible
- A result of Hyatt’s IT systems limitations, Priceline stays counted
- And the free night itself even counted, as long as you had something charged to your room during the stay.
Two Priceline stays at many $35 each yielded a free night. And then afterwards every free night plus another paid stay yielded a free night, plenty of people made a single long distance call from their room and begged the hotel at checkout not to waive this charge as a courtesy!
It wasn’t how the program was ‘supposed to’ work but it is how the program did work and I was comfortable with that.
Not Everything You Can Do Is Ok
There are plenty of things that cross real lines for me. IHG Rewards Club (then Priority Club) offered points for installing their shopping toolbar. Only you didn’t need to actually install the toolbar, just click through the page as though you were going to. And they didn’t limit you to doing this once. People earned points over and over.
Some people even scripted this. They earned hundreds of thousands, even millions of points over a weekend with their computers running in overdrive.
I knew that come Monday morning Priority Club would be shutting down accounts. Some people doing this knew it too and used only ‘throwaway’ accounts.
- Some people booked hotel awards with the points, those were cancelled.
- Some were savvier and booked future air travel with their points, thinking once tickets were issued they’d be fine. Tickets were cancelled.
- Some cashed out for e-gift cards, delivered immediately such as to Amazon. And then ordered expensive merchandise that shipped immediately.
- Those people had their accounts closed, but they kept the merchandise (and perhaps then sold off the merchandise).
This felt like stealing to me.
Parsing My Own Lines of Right and Wrong
I don’t have great bright lines for what’s ok and what isn’t, I have my own sense.
I have absolutely no problem with throwaway and hidden city ticketing. Airlines take a somewhat anachronistic view that they are selling you transportation between say DC and Milwaukee when you get there via Chicago … not seats on given flights between DC and Chicago and Chicago and Milwaukee, so you’re cheating by buying transportation between DC and Chicago (and getting off in Chicago) at the price of DC to Milwaukee.
I have no problem booking ‘mistake fares’. I also think airlines ought to be able to make a reasonable and timely decision on whether or not to honor true mistakes. If an airline is going to let people travel in international business class for a hundred bucks or so, I would like to be one of those people. But I think that common law and historical rules about mutual mistake and obvious errors ought to allow a party to rescind a sale quickly… though not after a month when a customer might reasonably rely on the travel as-booked.
But even though I feel like currency earned belongs to a traveler, it’s a fairly clear rule that awards in most programs can be gifted but not sold.
Towards a Theory of Where to Draw the Line
I think it comes down in some measure to how clear a rule is, and whether the rule is reasonable and unambiguous in a world where you don’t get to participate in negotiating over the terms.
Rules that are not actually enforced aren’t really rules in a meaningful sense. If a program wants to assert them they should give clear and reasonable notice. Hyatt and Marriott both did this when they decided they actually wanted to expire points, even though their rules have for years claimed their points expire.
Rules have to be reasonably knowable. So when rules are consistent across programs, consistent with standard practice, they are more reasonable than unique rules that aren’t clearly spelled out and promoted. Novel interpretations of rules, even if arguably supportable by language in program terms, ought to at least be provided with fair warning to members in advance.
Vague concepts like ‘spirit’ and intent aren’t persuasive. If something is permitted by the rules, enforcing notions like the spirit or intent (easy for a program to discern in its own mind and after the fact but often unannounced and unknowable by a member in advance) is unreasonable.
Airlines have a greater responsibility than bank programs to treat customers fairly. Banks more than airline and hotel programs have been known to fire unprofitable customers. Often that is just managing risk (customers who charge more than their income, pay off cards mid cycle) and is an approach often dictated by regulators.
Airline programs are more or less entirely unregulated. In that world there is advance greater burden on a program, writing and interpreting its own rules with little recourse by members, to do so fairly and with ambiguity resolved in favor of the member.
Programs that treat us fairly deserve greater respect My views are somewhat situational — in an era where programs make changes without notice, as bold as to take away award charts off their website such that members may not even know when a program devalues, those are not programs I feel any special obligation to act solely in their interest.
There are lines. I worry there has been a shift to view many things that were commonplace as unacceptable merely because they do not benefit a program.
What are your lines?