Last June, one of the most lucrative mileage promotions ever offered big mileage bonuses for purchasing web hosting and storage from a company called easyCGI through the US Airways and Hawaiian Airlines online shopping portals.

Back in mid-June, the US Airways mall had an offer from web hosting company EasyCGI for 4,757 miles per purchase. The offer had no restrictions on product specific purchases, length of service or quantity limits. It specifically said there were no restrictions.

Now, this didn’t seem like a mistake — there was a similar offer being made through the Hawaiian Airlines shopping mall for 7,269 miles per purchase with no restrictions.

But even though the Hawaiian mall was offering more miles, US Airways was the bigger deal — both because US Airways miles have more uses with more partners, and because US Airways was offering a 75% bonus on all mileage mall transactions made by Platinum and Chairmans Preferred members through the end of July. And US Airways sells ‘trial’ Platinum status. So it’s not hard to ‘buy up’ to Platinum to get the 75% bonus, and now the US Airways Mileage Mall offer with EasyCGI was 8,325 miles per transaction. (Do enough transactions and the $600 buy up Is worth it.)

The key here was that miles were being awarded per transaction. Members would sign up for an $11 monthly hosting account, and then could make additional transactions of $1.50 for monthly storage (or buy larger storage options for $4.50). And then they’d make additional $1.50 monthly storage transactions. Lots of them.

10 hosting accounts at $11 per month, and then 110 increments of monthly storage at $1.50 apiece would generate 1 million US Airways miles. Assume that you had to keep the hosting accounts open for 3 months, and your cost for the million miles would be ~ $825 (as a US Airways Platinum, or a little higher with Hawaiian, future million mile increments would be even less expensive since you already now have hosting accounts with EasyCGI and can just buy storage).

It cost less than $1000 to earn a million miles under the promotion. And similar deals were being offered on more than one shopping portal site.

The deal went south, with lots of finger pointing between easyCGI, the airlines, and the company running both shopping portal sites at the time FreeCause.

EasyCGI claimed that while they were incentivizing sales through an affiliate network, their terms didn’t allow incentives to be paid to customers (in the form of frequent flyer miles). FreeCause said that since EasyCGI wasn’t paying them, they weren’t going to pay the miles. And the airlines claimed they had no responsibility, it was up to FreeCause to honor the offer — that even though the shopping portals were called US Airways and Hawaiian Airlines, and marketing is done to the mailing lists of their frequent flyer programs, that when things don’t work out they claim not to have any involvement whatsoever.

The whole affair — and I didn’t know about the deal at the time, so wasn’t involved — made me think about the ‘mileage mall’ shopping portal in a totally different way.

As I pointed out a couple of months later, the defense being offered by shopping portals that it’s up to the merchants themselves to honor the offers that are marketing through these sites, creates perverse incentives to stick it to customers.

Taken literally, the position offered by both FreeCause and by Cartera Commerce is that members dealing with them are subject to the terms and conditions of merchants, terms and conditions that they aren’t a party to and are likely unaware of, and if the shopping portal does something contrary to those terms and conditions then it’s the member who gets nothing.

And to the extreme, a shopping portal could put out an offer intentionally, the member could follow instructions to the letter, and the shopping portal doesn’t consider itself obligated to anything if the offer they made doesn’t conform to the terms and conditions that the portal agreed to with the merchant.

And it’s all being done in the name of the mileage program, while they deny involvement.

As reported on Milepoint, some frequent flyers who didn’t have their mileage honored by these malls for their purchases of easyCGI web services have sued in Massachusetts court. The lawsuit can be found here (.pdf).

Apparently the miles at issue run into the nine figures — there’s a reference in the suit to 180 million miles and another reference to 200 million miles.

My guess as to what happened here, easyCGI probably meant to offer FreeCause a cetain amount of money for new customers rather than for any purchase. But what was advertised on the mileage mall sites was miles for any purchase at all, including cheap purchases of online storage.

EasyCGI wasn’t intending to pay more than once per customer and wasn’t intending to pay for small dollar purchases.

But somewhere along the line, that’s how the offer was presented. It was further advertised with no restrictions and specifically with no limit as to the number of miles that could be earned.

Payments were made, many orders later cancelled and refunded.

So the question is, does anyone have to honor an offer that’s made clearly where they take payment for purchases and a significant period of time passes?

This lawsuit apparently aims to find out, though I wonder whether we’ll ultimately see it litigated or if there will be a settlement, perhaps with a non-disclosure agreement in which case we may not find out.

Certainly an interesting read for any lawyers in the audience, or for frequent flyers who want to be able to rely on the offers that are presented to them on their favorite frequent flyer program’s website. That it’s come to a lawsuit certainly undermines that idea, that you can make a purchase and expect the frequent flyer program (in this case, US Airways and Hawaiian Airlines) to stand behind the offers made in their name.

  1. ffi said,

    At least the TIB went off OK. Thanks to Beckles and Vysean!

  2. MileageUpdate said,

    I think I know who most of those people are. LOL

  3. Mario said,

    It appears the frequent flyers are the ones bearing the brunt these days.

  4. RE said,

    I’ve pretty much sworn off using any of the shopping portals since this (which I wasn’t a party to) and other incidents such as the Cartera AA offer. The finger pointing and especially the lack of “ownership” by the airlines under whose names they’re operating, just turns me off. The extra bit of miles, if they ever go through, just isn’t worth it to me.

  5. Adam S said,

    Under the circumstances, an ethically fair solution might be the return of money spent on the purchases but not provision of the miles. These folks knew they were taking advantage of a loophole and, if they get the miles, the firms will likely try to recoup it from all users with less attractive earning rates for customers. Nevertheless, it seems the firms should not be able to wriggle off the hook entirely. But that’s just my view of what might be fair – I can’t begin to guess how a court will approach this.

  6. Victor said,

    I for one welcome this. The entire business model of these sites (Cartera especially) seems to be based on denying benefits earned. I have made several purchases through these portals and I haven’t once seen miles post. Tracking down who is responsible has been a royal PITA.

    Nothing like a class action with big money payout to force the marginal out of the business and to shine the light a bit on those that survive.

  7. redcat255 said,

    LifeMiles anyone? :)

  8. Delta Points said,

    @redcat255 – I, like “fti”, am allergic to PetSmart so could not, achooooo, take part ;-) but fun to watch.

    Good post and input Gary as always. You are a treasure to us all!

  9. Mike said,

    For most of these deals, I say “easy come, easy go.” It’s nice if mistake fares get honored, but I wouldn’t expect them.

    But for this one (and I have no skin in the game), enough is enough. Some lawyer somewhere should have caught it. Furthermore, there does seem to be a pattern of companies making the customers’ chase them down, with no one taking responsibility. Frankly, I don’t feel bad for any of the merchants involved.

  10. HikerT said,

    Good luck with the lawsuit. I think the best they can expect is a refund of their purchase, assuming they haven’t aready gotten a refund from their credit card company or EasyGCI.

  11. Guest said,

    Cartera are scammers. Had a transaction with AA portal with an email from the purchase which states how many miles i earned for the transaction. They denied it and blamed it on me saying i must have done something wrong. Strange that the vendor sent me an email saying how many miles I’d earn, yet I must have done something wrong in the transaction to not get the miles. Will never use the AA shopping portal again. Does anyone know which other portals are run by Cartera?

  12. Glenn said,

    Seems unlikely that the individuals in this case will see much of any money, but that’s okay, as long as the companies in question have to pay out, even if just to lawyers.

    Seriously folks, a decent lawyer should be able to write you some decent verbage that will let you wiggle out of this sort of thing. Seriously, get your shit together. You have nobody to blame but yourselves if your T&C’s aren’t clear.

  13. Gene said,

    Makes me sick…

  14. Mooper said,

    AdamS and HikerT have the right idea. Money back, maybe something in excess, and they’ve made them whole.

    I actually think lawsuits like this work *against* the interest of those who wish to milk the mileage loopholes. I understand these are private lawsuits, not government-sponsored, but in the end they function like public regulation in that they punish to companies involved in a manner that encourages them to be more stingy and skittish in the future — less offers for us to take advantage of.

  15. Dan said,

    As an attorney, although one admittedly who does not do this type of work, this law suit seems both legally sound and likely pointless. Based on the information provided, either Easy CGI or Freecause may well be found to have been in breach of contract. It is clear that a lawyer at either one or both of those firms made a pretty bad mistake. However, if I had to bet, I would gamble that US Air and Hawaiian’s attorneys did not make the same mistake and they have contractual protection from liability and will be able to get their names off this lawsuit.

    I think this lawsuit is pointless since, from what I gather online, neither Freecause or EasyCGI have the funds to defend the case and pay the plaintiff’s attorneys fees never mind buying 200 million miles from these two airlines to give to the claimants.

  16. HikerT said,

    Not a lawyer but I think the plaintiffs will have a hard time convincing the court they were unsophisticated purchasers duped into these transactions as they seem to claim, much less individuals who did so in good faith to purchase web hosting. So Randy Peterson, the first named plaintiff, founder of Flyertalk, milepoint, and boarding area entered into these transactions believing this wasn’t going to be a huge YMMV? LOL! C’mon, Randy of all people would be well versed in how affiliate commissions work. He didn’t think it prudent to google EasyCGI’s affiliate agreement which clearly stated that they didn’t pay commissions more than 1 unique signup and reserved the right to reverse them? I stumbled on this and similar deals, emailed freecause about various terms and restrictions, and it was pretty clear to me they didn’t have a good grasp on the actual terms. All they did was regurgitate what was on the website. Are they at fault for that? Perhaps. But it was enough for me to proceed with caution. Anyone that exploits these deals knows they are a huge YMMV, you win a few, and lose many, This deal was not blogged. The plaintifs weren’t unsophisticated spoon feed neophytes like most deals that go south. Anyone who found it was actively looking for a deal to exploit.

  17. Adam said,

    The first plaintiff listed in the lawsuit PDF is Randy Petersen.

  18. NateEsq said,

    As a lawyer. Not that I practice in this area of law, but I am not sure that refunding the plaintiffs (if they are entitled to a refund) puts them back in the same position, as there is a level of expectation that a customer using these portals would expect.

  19. Alex said,

    This is fascinating and a great write up. Let’s go misled consumers!

  20. Ford said,

    @Guest

    You asked which other portals are operated by Cartera, in addition to AA. United, US Airways, Southwest, Delta, almost all the airlines are run by Cartera. Thanks to heavy skinning, it’s difficult to see, but the Chase Ultimate Rewards Shopping Mall is run by Cartera as well. I’m sure there are more. They’re basically the “all 20 fingers and toes in every dirty pie in London” type of outfit.

  21. Ck said,

    So now I know the list of people who killed about 3 different online shopping portal opportunities that were humming along well… Lets Talk was a great one offering 2665 Miles that would post for just ordering an accessory for $5 and free shipping… Worked like a charm at about 10 per month… Then died abruptly as all fixed mile based redemptions were pulled. Interesting aspect is HA did honor this for people who signed up for the ~$10 hosting instead of just the disk space pop… And the T&Cs of that mileage mall had terms that if this goes to court and you loose that you must pay standard and customary fees…. Better hope this settles… I’m actually a little surprised Randy is on the list. You win some you loose some but this sounds nuts. The small print on signup T&Cs were fairly extensive and if they made a prompt refund its hard to believe they will win.

  22. DaveS said,

    “Now, this didn’t seem like a mistake — there was a similar offer being made through the Hawaiian Airlines shopping mall for 7,269 miles per purchase with no restrictions.”

    That doesn’t seem like a mistake? We sure can play naive when it suits us, can’t we?

  23. Gary said,

    @DaveS – the number of miles wasn’t a mistake, why would I play naive, I wasn’t in on this deal.

  24. DaveS said,

    What I meant is that it sure is obviously a mistake that someone would offer 7,269 miles for any purchase with no restrictions. Those miles are conservatively worth about $75. Nobody gives a $75 bonus on a $1.50 purchase. That has to be a mistake.

  25. pointhound said,

    DaveS – correction, idiots make that kind of offer. Freecause are idiots, and deserve to pay for it.

  26. oliver2002 said,

    Sad how the state of affairs have become… Previously people would just sign up for 5-8000 miles spending 8-10$ and move on, maybe after signing up friends and family too. Nowadays people read the T&C for loop holes and write scripts that use each deal a few hundred times :@
    … And then go sue tom, dick and harry if the provider doesn’t honor :td:

  27. Oliver said,

    Interesting that Gary apparently thought it wasn’t worth mentioning in that long blog post that Randy is the first plaintiff listed in that suit. Instead it’s just “some frequent flyers”.

  28. J said,

    WA has a PDF file with all the names, #1 being Randy

    http://boardingarea.com/thewanderingaramean/2012/11/is-it-possible-to-take-the-quest-for-points-too-far/

    http://boardingarea.com/viewfromthewing/files/2012/10/MileageMallSuit.pdf

    Well, let’s hope my comments don’t get “blocked” :)

  29. Gary said,

    @J – the .pdf came from this very post, as you can see from the link you posted :P

  30. Gary said,

    @Oliver I did not name any of the names, but I’m clearly not hiding a thing since I posted the document – unredacted

  31. hobo13 said,

    I’m wondering why you didn’t know about the deal, Gary? Isn’t Beaubo your award booking business partner?

  32. Ron said,

    I’d be embarrassed to sue over such an issue – scammers have no limits to how far they’ll push things, apparently. Pretty disgusting to read the names of people involved – mostly third world types from the sounds of things – all on the hunt for an easy scam…

  33. Randy Peterson lead plaintiff on 200M mile lawsuit against US and HA portals - FlyerTalk Forums said,

    [...] portals document.write(''); Couldn't find this being discussed anywhere on FT. The story The names on this lawsuit are quite interesting; several will be recognizable to established [...]

  34. UrbaneGent said,

    I’m surprised Randy Peterson would attach his name to such trash, considering he is the first to be on the side of the airlines on his blog(s) when it comes to more legitimate lawsuits against them (the airlines). I do not know how the courts view these types of lawsuits (when a company makes a big mistake like this and rectifies it), but I would assume a quick refund would make everyone whole again. Reading all the issues people have had with these online “malls” over the years, I hope this will teach those who are running them a lesson.

  35. AA_EXP09 said,

    Ron
    Some of the names are even people running for TB.
    Oliver
    Scripts can be a good thing too. I remember back when Mafia Wars was popular I would do a paid powerleveling service for people in a few days that would net me some $$$ and scripts would help with that a lot.

  36. Bits ‘n Pieces for February 22, 2013 - View from the Wing said,

    [...] Shades of the easyCGI shopping portal debacle? Nonetheless some will find it worth playing with, and certainly interesting to watch play out. [...]

  37. Add A Comment

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