After we published last month’s cover story about online shopping malls (see http://insideflyerus.wpengine.com/link/?5228), a few mileage mall promotions garnered a lot of interest from frequent flyers when they weren’t honored. Frequent flyer program members made purchases expecting to earn thousands of miles that never materialized.

These mileage mall deals gone wrong brings attention to the relationships between the airlines, vendors and mileage mall portals and have members asking who is ultimately responsible when a deal falls through? The airline? The mileage mall or merchant? And can members ever trust a program again when they change the terms and conditions after a promotion is already underway?
Every frequent flyer should be aware that with every potentially lucrative promotion, there’s a risk that it can change. Regularly embedded in the fine print is a sentence that can let a program off the hook and it goes something like this: “Offer subject to change without notice.” Even if you carefully examine and understand the terms and conditions, play by the rules and do everything correctly, the programs reserve the right to change the terms and conditions at any time. If a mistake or poorly designed promotion threatens to be too costly, the programs sometimes resort to playing this trump card.

Case Study 1: American AAdvantage

One of the offers that went awry recently involved a promotion found on the American AAdvantage eShopping site which stated that members could earn 83,871 American AAdvantage miles for making a purchase from Verizon Wireless, such as a desktop phone charger for $4.96. Many members jumped in on the deal, reasoning that a $5 purchase was a small price to pay for the chance to earn an impressive 83,871 miles. Some members reasonably assumed that the offer posted was a mistake and the deal most likely wouldn’t be honored, but hoped for a goodwill gesture of 1,000 miles or so being deposited into their account. Milepoint member leeivan86 suggested to treat the deal as a “fun opportunity rather than a serious deal where the T&C’s are expected to be honored completely.” View from the Wing’s Gary Leff made a purchase just in case the offer went through but gave the deal less than a 20 percent chance of being honored: “In the end, I’m not being greedy on this one, I’ll go for it once and hope it gets honored but my guess is that the chance is less than 20 percent. Your mileage may vary.”

The day after the deal appeared, a representative from Cartera Commerce posted a statement on milepoint.com saying that the offer posted was incorrect and would not be honored:

“Cartera Commerce, Inc., operator of the AAdvantage eShopping mall, displayed an incorrect offer for certain products available through Verizon Wireless on the AAdvantage eShopping mall website on Tuesday, Aug. 10, 2011. The incorrect offer of 83,871 AAdvantage miles for online purchases of certain Verizon wireless accessories was the result of a Cartera system error. We apologize for any inconvenience this may have caused.

Due to Verizon’s Terms & Conditions, which reward American Airlines AAdvantage miles on service plans only, Cartera is relieved of awarding AAdvantage miles for shoppers who clicked on the offer and purchased Verizon Wireless accessories online. The specific Verizon Wireless AAdvantage eShopping mall offer Terms & Conditions–which were available on the offer details page–are as follows:

‘Reward eligible for reward plans only (new service, family share, add a line, upgrade and prepay). Reward is not eligible on accessories.’

Those who purchased one of these incorrectly displayed products will receive an email from Cartera with further explanation, including instructions on how to return the product(s), if desired.

Again, we apologize for any inconvenience this may have caused and look forward to your continued use of the AAdvantage eShopping mall to maximize your mileage earning.”

In addition to the apology from Cartera Commerce, members received an email with an offer of up to 5,000 miles. Members who made a Verizon purchase from the AAdvantage mall were offered 2,500 American AAdvantage miles for the purchase and an additional 2,500 miles if they made a new purchase from the online shopping mall within the next 30 days. While 5,000 miles isn’t even close to the 83,871 miles members were hoping for, many members felt that it was fair compensation for their $5 purchase. Blogger Daraius Dubash from Millionmilesecrets.com responded to outraged members who were upset that they didn’t receive their full mileage bounty by expressing, “Mistakes happen. Sometimes we win, and sometimes we lose. Much better, in my opinion, to move on to the next deal and not get too excited about being unable to profit from an obvious mistake/loophole that was quickly shut down.”

The offer made by Cartera Commerce for Verizon purchases made through the AAdvantage mileage mall was a fairly straightforward error and the program responded quickly to the mistake by posting a statement on milepoint and FlyerTalk and offered members a conciliatory bonus (along with an incentive to shop even more).
But another offer from the US Airways Dividend Miles and Hawaiian Airlines HawaiianMiles shopping malls turned out to be more complicated and has not yet been resolved.

Case Study 2: US Airways Dividend Miles and Hawaiian Airline HawaiianMiles

A promotion listed on US Airways Dividend Miles and HawaiianMiles online shopping malls near the end of June stated that members could earn 4,757 Dividend Miles or 7,269 HawaiianMiles for making a purchase with web hosting company EasyCGI. The terms and conditions explicitly stated that there were no restrictions on the type of purchase made or the number of purchases eligible for the bonus.

FlyerTalk member beaubo described the offer as a “solid mileage earning offer” and “NOT a mistake or glitch or loophole as a separate EasyCGI offer for 7,269 miles per purchase with no restrictions was available on the Hawaiian Airlines mileage mall.” Some members who jumped on the offer made several purchases and were dismayed to find that their orders had been cancelled without notice and that they would never receive some or all of the miles they expected to earn.

FlyerTalk member Sagy received some of the miles from the offer, which he says “proves that the deal was a legitimate deal and that sometime later EasyCGI determined that they didn’t like the deal that they offered. Clearly, at that point they have the right to stop offering the deal to people; however, they don’t have the right to claim that the deal never existed for people who participated (and had credit cards charged) before they removed their offer.”

Unlike the offer from the AAdvantage eShopping site, the EasyCGI offer did not seem to be posted in error and looked legitimate. However, in explanation, EasyCGI claimed they weren’t responsible for posting the offer. They said a “third party” made the mileage offer without their knowledge or authorization. In an email sent to FlyerTalk member beaubo, EasyCGI explained: “It was discovered recently that an independent third party named FreeCause (“FreeCause”), unrelated to EasyCGI, issued an offer promising airline miles in connection with certain purchases of EasyCGI services. Please note that this FreeCause offer was not made by EasyCGI. Nor was such offer authorized, approved of or participated in by EasyCGI. Please understand EasyCGI is not responsible for the actions or inactions of FreeCause.”

FreeCause, the company that operates the US Airways Dividend Miles mall, has basically said that they also are not responsible for honoring the deal and put the blame back on Easy CGI, saying in an email that “Easy CGI’s position is that these transactions did not meet the requirements of a qualifying purchase for which they will pay a commission. It is the receipt of this commission that allows us to then credit you with miles in the mall.”

It was FreeCause, however, who posted the offer on the US Airways Dividend Miles mall website. If certain types of transactions weren’t eligible to earn miles, they should have included that information in the merchant details. “There are no restrictions at this time” was posted in the restrictions section, leading members to assume that all purchases would earn miles.

FreeCause also posted another mileage offer for a different webhosting company, Omnis Network. In an email sent to a member who purchased a domain registration service from Omnis Network via the US Airways Dividend Miles mall, a representative of Omnis explained, “I am guessing that the reason why you did not receive any miles credit for your purchase is because you only bought domain registration services. We only pay commissions to the third party company for web hosting accounts, and not for domain registration. So I am assuming that they only offered miles credits for web hosting purchases only.” In other words, only specific types of purchases were eligible to earn miles. Again, this information was not posted on the mileage mall website and members had no way of knowing which purchases would earn miles.

Unlike Cartera Commerce , FreeCause made no attempt to contact members or offer a public statement and apology. And as InsideFlyer goes to press, they still haven’t explained how their mileage offer to the customer was so radically different from the undisclosed affiliate agreement with the merchant. And they have concealed their involvement in posting a false offer. “Had FreeCause operated in a transparent accountable manner like Cartera, indeed much of their bad faith conduct could have been avoided,” said beaubo.

Members who made EasyCGI and Omnis Network purchases expected to earn miles and nearly three months later, they are still waiting for a resolution.

Who’s Responsible?

These recent mileage mall deals gone bad have caused members to question who is ultimately responsible for fulfilling mileage offers.

BoardingArea blogger Gary Leff looked into the recent unfulfilled mileage mall offers and wrote an explanation of the complicated relationships that exist between the airlines’ mileage malls, merchants and third party vendors in his blog, View from the Wing, which we are republishing in part here:

“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.
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 speculating 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 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. 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. And if it’s not transparent to me then what are the odds that the average consumer understands who they are even transacting with?

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.”

Case Study 3: United MileagePlus

A third targeted promotion launched by United MileagePlus was different than the other two mentioned here in that it was a partner promotion and included all partners, not just mileage mall partners. And the problems caused by the promotion could have been prevented if MileagePlus would have thought through the promotion more carefully before launching it. Some of the details of the promotion were vague and consumers were quick to find ways to take advantage of the offer.

MileagePlus members targeted for the offer received one of three offers: 1,000 bonus miles after every two transactions, 1,000 bonus miles after every three transactions or 500 bonus miles after every four transactions. The original offer stipulated that there was no limit to the number of miles members could earn with the promotion and the email sent to members emphasized this fact: “Thousands of partners. Unlimited bonus miles.”

There was a $10 minimum purchase (excluding tax) for retail purchases but there was no minimum purchase specified for dining transactions. Some members who called to ask United MileagePlus customer service about whether they had to spend a minimum amount at participating restaurants were told there was no minimum while others were told they had to spend at least $10 for a transaction to be eligible.

It didn’t take long for members to figure out the best way to earn miles with the least amount of spending and there were two main strategies, both of which were shut down in less than a month. One strategy revolved around the dining program, for those who understood that there was no minimum spend required on dining purchases, they figured that they could make small purchases at participating restaurants. Buying a $1 Coke would presumably count as a qualifying transaction. For members who received the 1,000 bonus miles after every three transactions offer, spending $150 on Cokes would result in 50,000 miles.

Another strategy was to buy gift cards from retailers at the online shopping mall who offered miles for gift card purchases, including Home Depot and Sam’s Club. You could buy 150 $10 gift cards from Sam’s Club and earn 50,000 miles, plus you could then spend the $1,500 worth of gift cards on future shopping at Sam’s Club or Walmart. Members choosing to buy gift cards for future purchases could essentially earn an unlimited number of miles for “free”, assuming they were going to use the gift cards to pay for purchases they would have made anyway.

More than three weeks after United MileagePlus launched the promotion and individual members had purchased thousands of dollars in gift cards and dining purchases, MileagePlus changed the terms and conditions without immediately notifying registered members. A FlyerTalk member, penner42, happened to notice the rule change and posted on FlyerTalk that two significant changes had been made. The first was that “All transactions must meet a $10 minimum product value (exclusive of taxes, tips and/or shipping and handling fees) in order to qualify for this offer.” The program also put a mileage cap on the offer, stating that “registered MileagePlus members may earn a maximum of 25,000 bonus award miles during the offer period.”

Members were upset not only by the changes themselves, but also with the lack of notification from MileagePlus. FlyerTalk member DealDetective stated “If they do invoke their right to change the terms, I would hope they would notify those of us who have registered that there has been a significant change in the offer. How many people would even think to verify the terms of a promotion after they registered?”

Two days, and a lot of angry members later, United did send out an email to registered members, notifying them that the terms of the promotion had changed. Instead of unlimited miles, members could now earn “thousands” of miles. Not only that, but United tried to spin the news as being a positive change. The email to members began by saying that they have extended the Months of Miles challenge: “Great news! We’re extending the Months of Miles Challenge until Dec. 15, 2011 to give our members the opportunity to earn more miles during the busy holiday shopping season.”

It is true they extended the end date to earn miles from Nov. 20 to Dec. 15, 2011, but the overall changes were certainly not viewed by many as positive. You have to read further to see the concession that, “There have been some important updates to the challenge” and find the substantial negative changes in the fine print: “Registered MileagePlus members may earn a maximum of 25,000 bonus award miles during the offer period. MileagePlus will honor the full amount of award miles for those members who earned more than 25,000 bonus award miles through Sept. 9, 2011.” Although members who earned over 25,000 miles before the rules changed were told they would receive all of the miles earned, changing the promotion after it launched has not been well received by many MileagePlus members.

Although this offer did not play out to be as lucrative as many hoped, United did honor the original terms for those who had already spent the money to get the miles. Instead of completely closing the deal, they offered a concession. As it stands now, members have almost a month more to take advantage of the deal and for those with the offer of 1,000 miles after three transactions, they can still earn 1,000 miles for three $10 purchases, which equates to 25,000 miles for spending $750.

Buyer Beware

When it comes to promotions or bonuses offered by mileage malls, milepoint member dcpatti, who was involved with the US Airways/EasyGCI/FreeCause debacle, suggests members “buy only what you would already be buying OR what you can afford to gamble. If you walk into what you think is a good deal, only to find the vendor won’t honor their offer, you may find yourself with no miles and just a credit card bill.”

While most promotions are executed with few problems, occasionally there are mistakes and misunderstandings. Some of these offers are complex and it isn’t always clear who is responsible when there are multiple parties involved. Or whether the party that is responsible will acknowledge their culpability. You can lower your risk by keeping meticulous documentation of the original rules and your activity. The programs have taught members to be very astute about their offers and this at times can come back to bite them.

For the frequent flyer participating in a promotion, it should be straightforward. Read the terms and conditions, register, complete qualifying activity and earn the miles. Unfortunately, this isn’t always the case. Only you can decide if it’s worth your time, effort and money to try to benefit from one of these “mistake” promotions. As for those who might criticize members who do take advantage of these offers, we’d like to point out that it has become quite difficult to know what is a legitimate offer and what is not. When one can earn 50,000 bonus miles (or even 100,000 bonus miles) for a credit card application in which the first year card fee is waived, how can somone distinguish that from a “mistake” offering 50,000 bonus miles somewhere else?

As with anything that seems too good to be true, if you come across a promotion that appears to be insanely lucrative, proceed with caution or hit the ground running before they change the rules. Sometimes taking a risk and spending a lot of money to earn miles through a promotion pays off exceedingly well and could make you a mileage millionaire several times over in a matter of weeks. And sometimes it doesn’t and you end up returning the 1,000 thingamajigs you didn’t want in the first place.