There’s a Point at Which the Most Clever Mileage-Earning Strategies Become Criminal. And I Don’t Know Where The Line Is.

Via @palmerlaw comes a story (out of Florida, natch) which illustrates legal risks of taking advantage of some of the very best deals and operating in the ‘grey areas’ of complicated frequent flyer programs.

Anything that a program deems unintentionally too generous may be your fault, and they could even sue you for it.

Their IT glitches may be seen as your problem, not theirs (although I could imagine certain courts taking a law and economics approach and suggesting that programs have the best incentive and can internalize the cost of preventing problems, and so should be the ones held responsible).

So What Was the Glitch That Lands a Mileage Junkie in Court For $150,000 in Damages?

Here’s what he did:

It was the glitch that kept on giving.

That’s how Choice Hotels International, one of the world’s largest hotel chains, portrays a flaw in its online reservations system in a lawsuit accusing a St. Petersburg man of fraudulently redeeming gift cards worth $48,500 in a rewards program for loyal customers.

It seems that this man was making reservations with Choice Hotels, getting awarded Choice Privileges points, and cancelling his bookings.

I’m not certain what was happening here, since the points aren’t usually awarded until checkout. Perhaps the missing element from the article is he was earning shopping portal points which weren’t getting taken away when he’d cancel his reservation, rather than points for the stays themselves.

In any case, he would keep the points and cash them in for gift cards.

The Lawsuit: the Guy ‘Shoulda Known We Were Making a Mistake’

Choice Hotels is suing him seeking triple damages.

They claim he “knew or should have known that people don’t get rewarded by hotel franchises for declining to spend their money on a room.”

The lawsuit said the rules of the program make clear that customers earn the points for “actually staying in a Choice Hotel room and paying for the room in full.”

“Frequent stay programs are common throughout the industry and neither Choice nor its competitors offer rewards for frequent reservations,” the lawsuit said.

Programs Make Mistakes All the Time. And Then Fix Them.

I don’t know that even the claim that programs don’t just award points for things other than actually staying is right. Just this week Hyatt gave a whole bunch of people 30,000 points who merely registered for the current promo. They identified the issue, took responsibility for their own IT glitch, and solved by problem by clawing back the points in a timely manner.

What About When Programs Don’t Fix Their Mistakes. Do You Just.. Win?

I get emails from people all the time who redeem miles for upgrades or awards, and find that the points don’t get deducted from their account.

This used to be very common on United. On IHG Rewards Club redemptions members would frequently see the points they used for a stay redeposited after a stay. I’m not sure a member is obligated to bring this to the attention of a program — spend time on hold, explaining it to a representative who doesn’t really understand, convince them to open up some kind of support ticket, follow up when the program doesn’t act. I don’t think it’s wise to just go ahead and spend the points.

I certainly wouldn’t right away. I would want to make sure that the points were available up until actual travel is completed.

I once had a US Airways award ticket issued, where Dividend Miles auditing found that there was no frequent flyer account attached to the redemption and so no miles withdrawn. They called me and asked, rather accusatorily, how I had planned to support the award (as though it was my doing, or could possibly have been my doing, rather than their agents — I simply told them “with the miles in my account”).

After a certain amount of time, and I don’t have a clear sense of how long that is, the miles are more or less there for use.

Can Benefiting Too Much Be Criminal? What About Too Little?

This case is a civil suit. I was an expert witness in a federal criminal trial where someone, unbeknownst to their employer, credited flights to an airline small business program in their employer’s name and then used the points for personal travel.

I wonder, is it criminal for a shopping portal not to award miles that you earned? Goodness knows there are plenty of times I’ve gone through a mileage shopping site and the miles didn’t credit. Sometimes I follow up. Sometimes I don’t. I’m very often cheated by mileage programs this way.

I certainly do not intend to go through a shopping portal in order to not earn miles. But that doesn’t mean the shopping site has acted in a criminal fashion (computer crimes!) when they don’t award the points. Nor does it mean I ought to be entitled to treble damages in civil court.

Should Airlines Sue You Over Mistake Fares?

We all know that airlines don’t intend to offer international first class fares for just a couple hundred dollars, though, right? (Or do we?)

My own view there has always been to book the ticket, wait to see if it’s honored, but never to claim that I’m entitled to the fare (and sue if the airline doesn’t honor!), although I’ll assume an expectation that the ticket will and should be fulfilled if it isn’t cancelled promptly. I certainly don’t think booking a mistake fare becomes actionable on the part of an airline, let alone criminal!

But There IS a Line, Isn’t There?

Some strategies clearly push the line too far. In 2012 Priority Club offered 300 points for downloading their shopping toolbar, and you could do it as many times as you liked. They simply didn’t technologically limit it to one bonus per member (they didn’t even actually force the download to earn the points). So some people scripted it, earned hundreds of thousands of points or more, and then cashed out those points. Priority Club fixed the glitch Monday morning, but in many cases it was too late — members had cashed out their points for e-gift cards already, and spent the funds on those gift cards.

I wasn’t comfortable doing this myself, it ‘felt’ wrong. Although I cannot articulation a compelling principle that differentiates that from booking a mistake fare — except that I actually don’t think acquiring the points via scripting is wrong as long as the program had the chance to claw back the points or let the points accumulation stand, just as I think an airline ought to be able to choose whether or not to honor a mistake fare (as hotels are able to, and sometimes do).

While the magnitude of the supposed points-earning with Choice is impressive enough to set off alarm bells, I admit there are grey areas where it’s hard to define how far is too far — and it’s worth warning that sometimes pushing the envelope no more than is common among many in frequent flyer forums could land you in court.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Last year, I did a lot of international travel on Delta and was active in the SPG Crossover Rewards program. I noticed a number of times that it seemed that I was getting double credit for tickets to PEK in Business. I fly a lot, but TWO trips on the same flight to PEK on the same day? This happened for 4 different round trips, totaling some 30K Starpoints.

    I wrote an e-mail to Starwood, asking if there was some mistake. Their response was that they reviewed it, saw no issue, and told me to keep the points.

    I guess if you don’t act like a scammer, they will treat you right.

  2. It depends on what your definition of “criminal” is; also perhaps your definition of “obligation”.
    If your definition is different from the other party’s definition, I don’t see how you can assume any expectation of fulfillment.

  3. Fraud is fraud.

    It is no difference than if you find an ATM that will dispense cash over and over and not deduct it from your account, but you try to take as much cash as possible. It is no different from walking down the street and coming across a store with a broken window and taking something that is exposed right there.

    He discover the flaw and then intentionally did it over and over again which is criminal intent.

  4. I’ll probably come off a little soft here, but I kind of follow the “spirit of the law” mentality. As in your example with the PC shopping toolbar, it was obviously not their intent to allow for unlimited downloads and therefore, I wouldn’t take advantage of it. Despite the fact that you would not be breaking any specific rules they set forth, common sense should dictate.

    It wouldn’t matter whether GC’s had been purchased and spent or not. Just as with an ATM that kicks out too much cash, if you spend it, you’re still liable to return it if it wasn’t yours. In the PC issue, it certainly appeared that the users didn’t take money they didn’t earn. They just earned it in a dishonestly way (IMHO).

    In cases where there is an apparent hole, the company has been notified and acknowledges the problem, but then refuses to fix it, then anything goes.

    I also agree with your statement about mistake airfares. If they offer it and I can take advantage of it, that’s fine. But I’m not getting all bent out of shape if they catch their mistake and fix it. Caveat: If I book it two weeks out and they try to fix it only 24 hours before the flight, I’d have a problem with it as they would have had plenty of time to notify me and allow me to rebook. But if I booked 48 hours out and they caught it the next day, that’s on me.

    Perhaps companies should begin using a general disclaimer everywhere which basically states that “in the case where any portion of this program provides an irregularly high monetary benefit, that portion may be cancelled/modified retroactively”. I’ll leave it to the lawyers to try to come up with some sort of blanket statement which might protect them.

  5. I try to look at all of these things as though I were buying a physical good in a brick and mortar store.

    If I bring a product marked at $200 to the checkout in Target and, when the clerk scans the barcode, it rings up at $50, am I obligated to mention it? I have no way of knowing if the shelf tag was correct, if the product was on close out, or if there’s an error. I would hardly expect Target to come back to me to make up the difference. In fact, there are laws in a lot of states that specifically preclude them from doing so.

    I’m not sure how airlines (and now hotels) have managed to convince lawmakers and courts that they’re not responsible for their own errors. I’m sure there are $$$ in play…

  6. There’s a fine line…..buying a mistake airfare one time, compared to buying a mistake airfare 50 times. This guy found a loophole and exploited it. If Choice thought this guy was stealing, why didn’t Choice engage law enforcement? If Choice Hotels decided a civil suit was the best remedy, then maybe they don’t have a criminal theft case. Too many missing details are missing here. But my guess is that Choice Hotels is trying to recover here and the letter of the law says they can’t. So by filing a civil suit, Choice might be able to convince a judge that they were harmed by this guy. I think Choice Hotels has a 50/50 chance here, as many judges don’t think kindly of big companies bringing suits to individuals. Especially with mistakes in IT that should have been fixed internally.

  7. I had a slightly different opinion on this, the problem as I see it was that the guy’s exploit went outside the Ts&Cs.
    If Choice had launched an (extremely ill-advised) promo offering 300 points just for MAKING a reservation (without any proviso that the stay had to be completed) we’d be in the realm of ethics, not the law. Personally, I think mistake fares fall into that ethical realm. If the item is offered for sale and you buy it; you have not committed theft. But the defendant in this case allegedly used Choice’s website as a “faulty ATM” and obtained points that he didn’t even have a plausible claim to. That’s well beyond a mere ethical dillemma.

  8. Seems like Choice Hotels is viewing this situation as a “Slap Suit” figuring that the big deep pocket corporation can force the small guy to settle. But in this case the small guy has $48500 of house $ to defend himself.Seems it could cost Choice much more than $48500 in the long run especially if it gets in front of a jury.

  9. Isn’t the Choice example similar to the loophole that allows IHG point purchases through reserving a room on points, buy up points needed with cash, cancel and keep the points?

  10. I suspect that Chris Elliott is already at work “advocating” for the Choice “customer.” This sounds like just the type of situation where he would take the side of the customer against the company.

  11. @JohnB: Why did Choice go the civil route? Under Florida law a civil theft suit requires only “clear and convincing evidence” that a theft occurred. Had Choice pressed charges (and convinced a prosecutor to indict) they would have been up against the higher “beyond a reasonable doubt” standard. It could be that Choice recognizes that their case is weak. Choice would probably have a stronger case if Florida had a “theft by deception” statute, but I don’t believe it does.

  12. Also, Gary, doesn’t your post title need some rethinking? Do you really think that all of “the most clever mileage earning strategies” become criminal at some point? How about Track-It-Back? Lord knows I took that one as far as I could go with it, but others went further and I can’t imagine how it could their exploits could be construed as criminal. How about the Pudding Guy? Or the Mint Direct Ship program (setting aside ancillary BSA issues)? Some of the most clever strategies involve arms-length transactions where the hobbyists are operating entirely within Ts & Cs written by well-lawyered companies. I don’t think you really mean that taking advantage of an intentional (but perhaps not well thought out) promotion eventually becomes criminal, do you?

  13. “It is no difference than if you find an ATM that will dispense cash over and over and not deduct it from your account”

    False, there is a tremendous difference. Money is money, however points have zero value, as written in Terms & Conditions of every rewards program.

  14. Stupidity and bad programming should hurt. Slap the guy with the same penalty for fraud that we give to banksters and wall street crooks: make him pay a fine that is one-tenth of one percent of what he stole, then let him keep the rest and walk away laughing with no admission of guilt and no jail time.

  15. @BothofUs2: I don’t think your comparison is fair. The IHG buy-points method is still costing the recipient of the points money, and for something they actually sell (You can buy IHG points straight-up). It just is a method of getting a slight discount, and they’ve let it go on for years.
    When you use this method, you purchase the points you need… and when you cancel the rezzie, THEY keep your money (which you exchanged for points). There is a mutual exchange of value.

    @Sam: You are splitting a very fine hair. Points, in their intrinsic nature do not have value. But yet, he exchanged them for actual money-like products (the gift cards).
    This is probably the thing that will undermine their case. They themselves say the points have no value, so how can they say that in this particular situation they’re of value.
    It might be true that he unethically exploited their thing and amassed a bunch of points, valueless by their own definition.
    The fact that the then took their (valueless) points, and completely within the legit framework of their program turned them into gift cards, etc is ancillary to the actual “crime”.

    I agree with @Dogbert The Consultant here: He should have to pay back some relatively small portion, ‘cuz deep down inside, he knew this wasn’t legit. There *should be* a deterrent to consumers who don’t know where ethical lines lie.
    But there should also be a deterrent / encouragement to the companies: Fix your own crap! Don’t whine and cry your multi-million dollar company let a system error perpetuate, and someone took advantage of it. If they win this suit, there is NO incentive for companies to make quality, tightly run programs–they can just sue whomever exploits it too much.

    Fundamentally, every loyalty program out there holds all the cards, makes all the rules, and ALL have legal stipulations they can change or cancel the program at any time, take your points, and cut you loose. Consumers are continually getting the shaft with devaluations, broken promises of perks, etc etc. Having the responsibility for the company’s IT, programming, and internal audit controls shifted to the consumer is not all fair or appropriate, and IMO would set a dangerous precedent across many industries. (Disclosure: I work in IT!)

  16. i think everyone here is missing the most important detail – the guy makes swords for a living.

    but seriously, if you read the article, choice says that he exploited this glitch from october to january – i.e., for four months. i don’t recall if the article said he just stopped, or choice finally got off its butt and fixed the glitch.

    also it’s important to note the dispute over the $48,500. chat says he got less than 10% of that. while i’m not a choice member, a quick scan of its website says that a $50 gift card costs 16,000 points, so to get $48,500, he would have needed to get over 15 million points via the glitch.

    not to mention that one should be suspicious of that $48k number. how much you want to bet that choice is claiming damages based on the maximum cost to purchase the number of points he acquired through the glitch?

  17. Gary, A while ago I think you were defending the hot dog guy who was selling tourists $30 hot dogs on the grounds that it was the tourists’ fault that they didn’t know the price of a dog. That logic makes it clear that there should be no liability when a big company screws up to the advantage of the lowly consumer. At any rate, in the case of special promotions I think it would be quite easy for companies to clarify the potential consequences of taking advantage of the stupidity or incompetence of the offering company.

  18. @Gary To me, the Reservations scam and Toolbar scam are virtually identical. So why do you state that one is grey and the other is black?

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