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200 million frequent flyer miles.
That at any rate is the crux of an October lawsuit filed by 26 frequent flyers against four companies: Hawaiian Airlines and US Airways, which operate online shopping malls that awarded miles in their respective loyalty programs; FreeCause, a company that provides the back-end shopping mall software for Hawaiian, MyPoints, AirMiles, and other companies; and EasyCGI, a web hosting company that promoted its services in the online malls of Hawaiian and US Airways.
The allegation is that EasyCGI offered bonus miles to new customers through the online shopping malls of Hawaiian and US Airways, but refused to award the miles when shoppers took advantage of the promotion’s unlimited earning potential to rack up millions of miles at very little cost. How little? Played right, a canny consumer could have racked up 1 million miles for less than $1,000.
In the lawsuit’s own words:
This is a complaint for breach of contract and violation of M.G.L c. 93A. Defendants promised an advertised number of airline bonus miles as an incentive for Plaintiffs to make qualifying purchases, but after Plaintiffs made those purchases, Defendants unjustifiably refused and failed to award those bonus miles.
The plaintiffs are a group of savvy frequent flyers — including Randy Petersen, publisher of InsideFlyer magazine and a host of websites focused on travel-loyalty programs — all of whom presumably recognized the potential to leverage the offer for outsized returns and took advantage of it.
According to the legal documents, the plaintiffs are owed 200 million miles. And they are suing to get them back.
There are two related issues here. The first is whether withholding the miles is legally or morally supportable. The second, assuming the first is answered in the negative, is which of the companies associated with the disputed transaction is responsible for rectifying the situation.
This promotion, including its terms and conditions, was clearly communicated, leaving little or no justification for denying mileage claims from those who met the qualifying conditions.
Which leaves us with the question of responsibility: Which company should be on the hook for paying out the miles? If EasyCGI designed and approved the promotion, as would be the case normally in such promotions, it clearly should shoulder the bulk of the blame and be required to make good on its offer. (Assuming the miles were purchased from US Airways and Hawaiian for 2 cents apiece, the bill for the contested 200 million miles would total $4 million.)
US Airways and Hawaiian Airlines? Although the offer was made through their mileage malls, it seems a stretch to hold them strictly accountable for the misdeeds of their participating merchants. On the other hand, the buck has to stop somewhere, and FreeCause, the developer of the shopping mall software, appears to be blameless. Unless, that is, it was somehow responsible for communicating an offer that was not what EasyCGI intended.
Presumably there are facts not yet in evidence that will help apportion responsibility fairly and accurately.
Misprint or Misstep?
More broadly, the case raises the question: When should a company be forced to honor a published price or promotion that it ultimately decides does not further its own interests?
And conversely, when should a company be allowed to ignore the promise implicit in such offers, with nary a “Sorry” to consumers who purchased a product or service on the strength of such offers?
I’m on record as favoring a “common sense” policy regarding mistake fares or other obviously unintended offers. And my admittedly personal common sense suggests that when a company inadvertently publishes a price or sales incentive that is clearly a misprint, the company should be allowed to cancel the offer retroactively, without penalty, so long as it provides refunds for any purchases made in response to the offer.
So, in the recent case of United’s offer of Hong Kong award tickets for four MileagePlus miles, I supported the DOT’s eventual ruling that United was not required to honor bookings made at the misprinted price. Among frequent flyers, that’s not a popular position.
Many travelers, having suffered repeated insults and indignities at the hands of the airlines, seem to feel that such missteps represent a welcome opportunity for consumers to give carriers a taste of their own medicine. While that’s an understandable sentiment, it’s neither fair nor reasonable.
In any case, although they both have a frequent flyer mile component, the United award discount and the mileage mall suit are fundamentally different. While the former is widely recognized as a mistake, a misprint, the latter appears to have been a consciously made business decision, albeit a bad one. As the suit documentation makes clear, the EasyCGI promotion was unequivocal in stating that the offer was not subject to any restrictions: “You can earn as many miles as you like. There is no cap.”
EasyCGI wanted to generate extra business and to do so it, or its partner companies, deployed a promotion designed to meet that goal. But the offer turned out to be more generous than intended.
Bad business decisions have consequences. That’s a basic premise of the free-market system. Smart companies are rewarded and flourish; dumb companies are punished and flounder.
In the case of Civil Action No. 12-3737C, filed in Superior Court of the Commonwealth of Massachusetts, it’s pretty clear that some company made a stupid decision and will be held to account for it. What remains to be seen is which of the companies named in the suit will be deemed the dumb ones, and how many frequent flyer miles they will be required to award.
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