Joseph DeRanieri needs our help getting 50,000 frequent flier miles credited to his AAdvantage account.
He hasn’t flown that many miles, but Citibank advertised a promotion stating that if an invited customer opened a new checking account, deposited $50,000 into it, made requisite debit card transactions totaling $1,000 and set up bill payment for at least two consecutive months, 50,000 miles would be credited to his AAdvantage account.
A lot of hoops for 50,000 miles, don’t you think? Full disclosure: I am cautious about where I put my money. I don’t use a debit card, and I don’t link my PayPal account to my bank account. So what about the promise of frequent flier miles would make someone move $50,000 to a particular account?
Oh, right. The lure of “free” travel. The loyalty program game some call “The Hobby.”
DeRanieri’s plea for help actually sounds genuine. He explains that he has met all the offer requirements and has contacted both Citibank and American Airlines several times about the fact that the miles haven’t appeared in his account. I can’t blame him for reaching out to consumer advocates. After all, a deal is a deal, and if the company doesn’t follow through on its end of the bargain, it’s deceptive.
His case makes me wonder why anyone would believe a written offer from a business for frequent flier miles, and even more, why people go to such lengths to collect miles?
DeRanieri provided the promotion code so I could read the offer’s terms and conditions. Instead of yielding the actual promotion disclosures, my Google search turned up dozens of blog posts by travel hackers who discuss the offer and how to best take advantage of it.
And by “take advantage” of it, I mean laying siege to it.
The points collectors don’t actually deposit $50,000 into the account, presumably because people with that much cash on hand have real careers and don’t have time to play airline miles games. Instead, the hackers deposit funds from another credit card, which earns them points on that card. They only keep the new bank account open long enough to score the miles, then they close it out, drain the account, and pay back the first credit card, effectively doubling their miles windfall. This is one form of what’s commonly known as manufactured spending.
Citibank quickly caught on to what was occurring and prohibited customers from using credit cards to fund the accounts (though some hackers still recommend using checks drawn on credit accounts). Citibank then slowed down the awarding of miles to all customers, including those like DeRanieri who appear to have followed the rules.
At the same time that DeRanieri wants help getting a credit to his AAdvantage account, so does Carol Weiss.
An elderly woman who plans to travel to France later this year, she sent us a USAir frequent traveler statement from 1996 showing a balance of 14,000 miles and asked for help getting those miles credited to her AAdvantage account following the US Airways merger with American Airlines.
I asked Weiss if she had traveled on the airline in the last 20 years. She told me that she hadn’t, but pointed out that’s irrelevant. The language on her 1996 statement reads: “Relax. Your mileage doesn’t expire. One big advantage of the USAir Frequent Traveler Program over other airlines is the fact that your miles don’t expire. The miles shown under “Current Balance” on your statement today will be available until you decide to use them, so you have plenty of time to claim your award.”
So, I guess we’ll ask the powers that be at American Airlines if it will honor the assurances made in black and white by USAir long ago.
But you know, nothing lasts forever. USAir didn’t last, and neither did its successor, US Airways. In fact, in 1996 there were 11 major airlines in the U.S., and now we’re down to just four. The oligopoly created by a series of mergers and acquisitions has left the few remaining players with a lot of control, and folks who play by the rules and take a business at its word are bound to lose the loyalty program game.
In case you missed it, I wrote a story a few months ago about everything that’s wrong with frequent flier programs in America. And since then, very little has changed.
The Department of Transportation’s Office of Inspector General completed its audit of frequent flier programs, saying the DOT wasn’t prepared to do much but train its employees to better handle complaints about frequent flier programs. Despite having the authority to ensure fairness to air consumers, the DOT decided not to involve itself in the messy business of how travelers get miles, or in the case of DeRanieri and Weiss, how they don’t.
While most of our readers (a healthy 80 percent, thank you very much) voted that they would welcome sensible regulation of frequent flier programs, a vocal opposition made themselves known in the comments section below my article.
Some of their observations were amusing and served to prove my points precisely. Amid a flurry of comments from airline apologists and those who hate regulation of any kind were comments from those who also dislike consumers.
Said one commenter, “Frankly, I don’t have much sympathy for someone who knows upfront that they’re playing a game and gets angry when they lose. No express promise was made, and the house came out on top.”
While I don’t think the average air traveler considers the accumulation and spending of frequent flier miles to be a “game,” I do agree that it’s a gamble and that more often than not, the house wins. Travelers with busy lives shouldn’t have to be a loyalty program expert or learn to game the system in order to benefit from what should be a simple program. When something is unnecessarily complicated by design, that’s textbook deceptive practice.
Another commenter wrote, “If people have not learned about the ins and outs of frequent flier miles programs by now, they never will. It’s a personal choice as to whether or not to participate and lots of people love them and many don’t. There is no law that says a person has to participate.”
That’s true. There’s no law at all.
Someone else wrote, “Ultimately, [the programs] are free. They cost you nothing. If you regulate them, they will go away.”
No, they’re not free, or the airlines couldn’t profit to the tune of $11 billion annually on them. Some passengers find themselves short miles for an award and purchase them, and others, like DeRanieri, modify their consumer behavior to indirectly purchase the miles that his (now) bank, Citibank, purchased in bulk. This is big business and not free by any stretch of the imagination.
And that’s to say nothing of the compromises passengers have to make when they redeem miles — taking itineraries less convenient or direct in order to use miles. With each transaction, someone is paying, and someone is benefiting. The programs are too profitable to go away, and regulation would introduce a scintilla of fairness to the way they are administered.
One clever commenter explained at length how people can game the system through manufactured spending. He summarized some of the expert strategies employed, which undermine the airline’s business while reaping benefits all the same. Another commenter followed by saying that he has used three million miles in his lifetime, and they were just like a gift that the airline didn’t have to give.
Then, like a cherry on the cake, my manufactured spending friend responded, “No … miles have a cost. In many cases if you really look into it you can see what I mean. For example, the fine print will tell you that if you opt to collect miles for renting a car, there’s a tiny fee for that. If you get certain tickets that do not give miles on air travel, they are always cheaper than ones that do give miles. If you get a loan or bank account that gives miles, its interest rate is lower. If you book say, the Westin Grand Cayman with Starwood points, they will charge you $45 a day in resort fees. If you paid cash there is no such fee. And so on. Miles pass the cost onto somebody and often times it is you and me.”
So perhaps we shouldn’t hold our breath for any major changes in the way airlines treat us when we try to participate in the programs that generate $11 billion in profit annually for the industry. All we can control is our own thoughts and behavior, so let’s start thinking smarter about how we spend our time and money, and whether frequent flier programs are really worth trying to figure out.
I don’t accrue miles when I fly, and in the four times I traveled this summer, I flew on American, Delta, Southwest and United, respectively. I actually redeemed miles for my flight on American, but it didn’t feel like a gift when I had to pay $75 per passenger to use the miles. My choice of airline is above all based on the airline’s safety record, followed by a combination of schedule and price.
If you’re a business traveler flying every week on the same airline, undoubtedly there are program benefits awaiting you. If you fly less frequently, there is far less appeal to accumulating points, and less chance of reasonably being able to redeem the rewards you want. Unethical and borderline unlawful activity to hack the system is shameful. Don’t jump through the hoops — you’re just lining someone else’s pockets. And let’s face it, it’s just not worth it.
Put your own needs first and don’t play the loyalty program games. You can thank me later.