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Dude, Give Me Back My 200 Million Frequent Flyer Miles!

Dude, Give Me Back My 200 Million Frequent Flyer Miles!

200 million frequent flyer miles.

Legitimately earned.

Illegitimately withheld.

Stolen!

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.

At Issue

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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  • BobChi

    They made a mistake, you got your money back. Let go and move on. 

  • BobChi

    They made a mistake, you got your money back. Let go and move on. 

  • mcoope3

    Bob, so if you bought something that turned out to be more valuable than what you paid for it, say a share of facebook when they first started up, and you spent some time researching the investment and arranging the payment, would you be happy to just concede the people who sold it made a mistake and are generous to refund your money and the mature thing to do is just ‘move on’ because getting screwed is your natural position in life? The fact is that in a contractual agreement the smarter and savvier party should gain, but what you are saying is we should punish intelligence with lost time for no gain and reward incompetence with free advertising and traffic with no loss.

  • mcoope3

    Bob, so if you bought something that turned out to be more valuable than what you paid for it, say a share of facebook when they first started up, and you spent some time researching the investment and arranging the payment, would you be happy to just concede the people who sold it made a mistake and are generous to refund your money and the mature thing to do is just ‘move on’ because getting screwed is your natural position in life? The fact is that in a contractual agreement the smarter and savvier party should gain, but what you are saying is we should punish intelligence with lost time for no gain and reward incompetence with free advertising and traffic with no loss.

  • BobChi

    If a company prices its widgets at 30 cents, when they really meant 30 dollars, and I order a million online, should they be required to fill the order? Of course not, they’ll cancel it and return my money. Perhaps one or two people spent time researching this obvious mistake – but mostly they just heard about it from each other and jumped on the “deal” with a frenzy. You’re talking about expecting a $75 premium for a $1.50 purchase – done thousands of times over. It’s very easy to play naive, isn’t it? This lawsuit all about selfishness and greed, not about getting screwed by some evil company. Among the plaintiffs are some people I formerly respected, but who seem to be simply craven greed machines here.

  • BobChi

    If a company prices its widgets at 30 cents, when they really meant 30 dollars, and I order a million online, should they be required to fill the order? Of course not, they’ll cancel it and return my money. Perhaps one or two people spent time researching this obvious mistake – but mostly they just heard about it from each other and jumped on the “deal” with a frenzy. You’re talking about expecting a $75 premium for a $1.50 purchase – done thousands of times over. It’s very easy to play naive, isn’t it? This lawsuit all about selfishness and greed, not about getting screwed by some evil company. Among the plaintiffs are some people I formerly respected, but who seem to be simply craven greed machines here.

  • http://twitter.com/Mileage_Update Mileage Update

    But they didnt make a “mistake”.  This offer was not a “mistake fare” they had this offer on multiple Airline Malls for weeks.  They didnt like the fact that they sold millions of items.  Whats the difference if 1 million different people buy an item or if 1 person bought a million items?  They still would have to give the same bonus miles.  From everything I’ve read they offered the deal and then didnt want to pay out the bonus miles.

  • http://twitter.com/Mileage_Update Mileage Update

    But they didnt make a “mistake”.  This offer was not a “mistake fare” they had this offer on multiple Airline Malls for weeks.  They didnt like the fact that they sold millions of items.  Whats the difference if 1 million different people buy an item or if 1 person bought a million items?  They still would have to give the same bonus miles.  From everything I’ve read they offered the deal and then didnt want to pay out the bonus miles.

  • http://twitter.com/Mileage_Update Mileage Update

    That wouldnt be good.  But the scenario you presented isnt what happened in this case.  At least from what I read.

  • http://twitter.com/Mileage_Update Mileage Update

    That wouldnt be good.  But the scenario you presented isnt what happened in this case.  At least from what I read.

  • mcoope3

    First of all your analogy of 30 cents for 30 dollars, a 100x difference, is wrong. Generally miles are worth 1 cent each, maybe some experts can stretch them to 2 cents but 1 cent is more normal considering a credit card typically earns either 1 cent or 1 mile per dollar spent in rewards. So, some people jumped through a lot of hoops to get $10,000 of miles for $1,000, a 10x difference. But this is basically a gift card that it could take them years to spend and that could be artitrarily devalued or used on tickets the airlines would not sell anyway. Also, the company making the offer did not mistake the offer amount, they mistook how aggressively people would pursue the offer. So it is more like if a company offered a widget sale trying to get more customers in the door, sold out all its widgets, stopped the sale, and then said oops this wasn’t worth it, everyone who got the widgets please turn them in for a refund, we have remotely disabled them all because we realized this sale could not make money. Having said all this, Bob, I do sincerely wish you the best of luck in your legal or public relations career representing the defendants in this case.

  • mcoope3

    First of all your analogy of 30 cents for 30 dollars, a 100x difference, is wrong. Generally miles are worth 1 cent each, maybe some experts can stretch them to 2 cents but 1 cent is more normal considering a credit card typically earns either 1 cent or 1 mile per dollar spent in rewards. So, some people jumped through a lot of hoops to get $10,000 of miles for $1,000, a 10x difference. But this is basically a gift card that it could take them years to spend and that could be artitrarily devalued or used on tickets the airlines would not sell anyway. Also, the company making the offer did not mistake the offer amount, they mistook how aggressively people would pursue the offer. So it is more like if a company offered a widget sale trying to get more customers in the door, sold out all its widgets, stopped the sale, and then said oops this wasn’t worth it, everyone who got the widgets please turn them in for a refund, we have remotely disabled them all because we realized this sale could not make money. Having said all this, Bob, I do sincerely wish you the best of luck in your legal or public relations career representing the defendants in this case.

  • http://profile.yahoo.com/RCWDZ633P2EOAO4PD2OHXUUYZA Paul

    Actually what’s been left out is how successful the promotion was in general.  Yes some figured out a way game the program within the rules (sort of reminds me of the US Mint program where you could by coins and use a Credit card – deposit the coins and pay off the cards – until they changed the rules.) Perhaps this program was HIGHLY successful, they made millions off the promotion, gained new customers. Now they don’t want to honor a ‘few’ who knew how to gain the most.  

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