US audits accounts of large DM purchasers

[jimcfs]

Just when the customer has thought they'd seen everything that US is capable of doing to them, the Sandcastle goes even lower, this time going after customers who purchased large amounts of DMs legitimately under a bonus promotion and then using them to provide tickets to other people, such as family and friends. Further, the US "Fraud Control Department" has been closing DM accounts, confiscating miles, canceling reservations made with these miles and then contacting the customer by email telling them that their decision is final with no opportunity to question what is going on and give their side of the story with no refund of the mileage purchases. This thread on FT details some of what these people are going through.

FFOCUS has been working with several of our affected members, investigated the situation and issued the following statement.

US Airways Freezing DM Accounts and Confiscating Miles Without Apparent Cause

As a leading advocate for frequent flyers and the traveling public in general, FFOCUS is deeply concerned about recent events allegedly taking place within US Airways under the guise of "Fraud Control." We have had reports from some of our members that US Airways sold them blocks of miles under a legitimate promotion, and then confiscated their miles and terminated their accounts when they tried to redeem the miles purchased. These members supposedly followed ALL PUBLISHED RULES of the Miles Purchase Program, and US Airways has not provided them with any recourse or valid explanation for their punitive actions.

While we acknowledge that any airline has the absolute right and even duty to ensure their program rules are properly followed, it now appears that customers who have acted legitimately within the terms and conditions of the Dividend Miles program have been punished for the misdeeds of others.

The FFOCUS Policy Board believes that US Airways is behaving in an arbitrary & capricious manner and in some cases without just cause. The trigger for account audits and arbitrary closures seems to follow a pattern: Customers responded to promotions aggressively, resulting in significant revenue for US Airways. Small accounts instantly grew to several hundred thousand miles, and subsequently end up "Under Review," Suspended or Closed, with no refund for the amount of the purchased miles.

In many cases, US Airways has refused to explain to the customer the reasons for their actions, and has refused to engage in meaningful dialogue with those affected. Furthermore US Airways has not permitted any discussion or appeal on the part of the affected customer, effectively stonewalling.

The actions undertaken by US Airways create the perception of impropriety. We urgently call upon senior management to publicly explain why customers who followed the rules have had their miles confiscated, and to assure Dividend Miles members that they can continue to redeem Dividend Miles for award travel without the fear that their accounts will be terminated or frozen without cause.

 

[SparrowHawk]

I've done some research regarding the Federal Trade Commission regarding whether that is an appropriate venue. https://www.ftccomplaintassistant.gov/

Here is some basic information on how the FTC operates. The above link allows you more information and a very easy way to file a complaint. Be aware after reviewing how the FTC works so you are not disapointed.

From the site:
Before You Submit a Complaint
The Federal Trade Commission, the nation's consumer protection agency, collects complaints about companies, business practices, identity theft, and episodes of violence in the media.

Why: Your complaints can help us detect patterns of wrong-doing, and lead to investigations and prosecutions. The FTC enters all complaints it receives into Consumer Sentinel, a secure online database that is used by thousands of civil and criminal law enforcement authorities worldwide. The FTC does not resolve individual consumer complaints. bolding is mine.

Your Privacy: How much personal information you provide is up to you. To learn how we safeguard your personal information, please read our Privacy Policy. If you don't provide your name and certain other information, it may be impossible for us to refer, respond to, or investigate your complaint.

 

[BoeingBoy]

US seems to have managed add new meaning to the old caveat that "If it sounds too good to be true it probably is." Using their self-awarded sole discretion to interpret the rules, they can decide that anything unusual is a sign of fraud and then use their sole right to determine guilt to find anyone guilty of wrongdoing - all while allowing no defense by the customer. A nice little gig - sell the miles, take the money, say the customer is guilty, confiscate the miles. A lot more profitable than selling transcons for $119 each way...

Jim

 

[PHL]

Has anyone disputed the transaction with their credit card for the miles purchase? I mean, if I bought miles for $500 and then US decided to take them away from me with no explanation or opportunity for dispute, isn't that theft?

 

[computer guy]

Has anyone disputed the transaction with their credit card for the miles purchase? I mean, if I bought miles for $500 and then US decided to take them away from me with no explanation or opportunity for dispute, isn't that theft?

Part of the problem is the promotion ended 12/31/2010 and to get the miles you had to purchase something from one of DM's partners that would give you XXX miles per dollar spent.

As long as you got whatever you purchased, you wouldn't be able to actually dispute it with the CC company. In one case, people purchased $5K of track it back lost and found services. During the promotion they were giving out 40 miles/$ so you got 200,000 DM just from that purchase. Now if you also purchased from 4 other merchants, US would give you 250% of the miles, I think it was on 3/1/2010. So on 3/1 you got 500,000 additional DMs.

If the accounts on FlyerTalk are accurate, some people did that and much, much more.


The other thing US had been doing is a 100% bonus for buying, giving, or sharing miles. So if you purchased 50,000 miles (the max you could purchase on this promotion), US would give you 100,000 miles for your purchase. If you gave someone 50,000 miles (purchase new miles for someone else), US would give them 100,000 miles for your gift. If you were to share 50,000 miles with someone (these are your own miles), the recepiant would get 100,000 miles.

So if you had some friends or family members, you could purchase 50,000 miles for yourself and get 100,000 miles. You could give 50,000 to your friend and they would get 100,000. In turn they could give you 50,000 and you would get 100,000 miles. Finally you should share 50,000 with the same person and they would get 100,000 and they could do the same back. So you could easily get 300,000 miles for the regular purchase price of 100,000 miles and the regular share miles price for 50,000 miles.

US did this several times this year. I think the last one was March or April, so depending on your credit card it is probably too late to initiate a chargeback for that promotion.

This promotion is currently going on again until 7/31/2010. Please see http://www.usairways.com/en-US/dividendmiles/programdetails/purchasemiles/default.html for the specifics of the current promotion.

 

[HP2USFA]

So basically people were taking advantage of the promotion and lost their miles.

I fail to see what the issue is.

I would take your miles away too if you transferred miles back and forth between the same two people just to take advantage of a loop hole. It was designed to bring new customers into the fold... not make two greedy folks happy.

Egads.

 

[BoeingBoy]

So you're saying that US management is so dumb that they shouldn't have to follow the rules they wrote? That they weren't capable of understanding that "buying, sharing, or gifting miles would allow people to share or gift miles?

Jim

 

[jimntx]

So basically people were taking advantage of the promotion and lost their miles.

I fail to see what the issue is.

I would take your miles away too if you transferred miles back and forth between the same two people just to take advantage of a loop hole. It was designed to bring new customers into the fold... not make two greedy folks happy.

Egads.

I spent over 20 years in the Information Technology field. Airlines (and, I'm including AA my own airline) have the sloppiest, least tested computer software of any industry as near as I can tell. Good programming would have prevented people from "gaming" the system, if that is what they were doing. Good management would have thought through the issue of "what is allowed, what is not." The "not allowed" would have blocking software to prevent it happening.

Allowing something to happen, then going back and punishing customers for actions they probably did not know were "illegal" is not the way to win friends and influence people. I don't think you've heard the last of this by any means. And, if those customers file complaints with government agencies, or better yet, file lawsuits, I'm looking forward to US Airways taking their "rules" to court (assuming they are as arcane as AA's AAdvantage rules) and trying to claim that they are clear, concise, and the customer is responsible for reading and understanding them.

I got a promotional email from the AAdvantage program recently. The fine print with all the no-nos in it was longer than the email itself, and in a print so small that even a magnifying glass would not have helped.

 

[BoeingBoy]

I'm looking forward to US Airways taking their "rules" to court (assuming they are as arcane as AA's AAdvantage rules) and trying to claim that they are clear, concise, and the customer is responsible for reading and understanding them.

The I had to pick a single rule for these US promotions that might not stand in court, it would be the "our sole discretion" to determine guilt or innocence. US makes itself judge, jury, and executioner while not allowing the customer any opportunity to show that their actions were within the rules of the promotion. To paraphrase the response one DM member got, "we believe you broke the rules and will not reply to further inquiries."

Jim

 

[SparrowHawk]

So basically people were taking advantage of the promotion and lost their miles.

I fail to see what the issue is.

I would take your miles away too if you transferred miles back and forth between the same two people just to take advantage of a loop hole. It was designed to bring new customers into the fold... not make two greedy folks happy.

Egads.

The point is that NO ONE knows. "Taking Advantage" is what you're supposed to do! When you use a coupon at the supermarket you're taking advantage of the promotional discount.

What US is doing essentially is this: Listen we'll sell you a case of Alpo for $5.00 and give you a coupon for $5.00 off the next case of dog food. Theen once they've lured you in they say "You don't have a dog so we're taking the food back and no we're not going to discuss it and we're not giving you the $5.00 back and the coupon we gave you is void"

There is a gap wide enough to land an A380 between "taking advantage" and outright fraud and in this case the fox is the judge of who ate the chickens! Sound fair to you? Sounds criminal to me.

This move by US is absolute Bull Feces and I hope the affected customers use every legal remedy at their disposal to shame/force US to return the miles, reinstate the accounts AND pay a financial penalty for their ham handed and arrogant approach. Of course we've seen this time and again from the TFB (Tempe Frat Boys) so I've no idea why I'm surprised

 

[HP2USFA]

I'm sorry, but I don't buy the 'might not have known it was wrong' approach to guilt free living.

And there's a huge difference between 'taking advantage' of coupons and exploiting a loophole for personal gain. These folks didn't just take advantage of a promotional discount, they copied their 'coupon' and shared it with friends who then in turn copied their 'coupon' and shared it back who then took that coupon and copied it and shared it back. You go see what happens if you try this creative approach to taking advantage of a promotional discount at your local supermarket.

Had these folks simply been satisfied with their 150,000 miles from their first transactions with their single friend, or better yet utilized different friends to share their miles with (aka spread that 350,000 miles over more friends as the 'promotional discount' was designed to do) there would be no problem.

These folks tried to fill their greedy pockets, got caught, and now wish to blame the company for not allowing them to do it. They broke the rules, or even the intent, of a private program they chose to participate in. How much did they spend on this program that gave them the 150k miles to begin with?

You may call being punished for being caught with your hand in the cookie jar 'illegal' - I call it 'taking responsibility for your mistakes'. Perhaps maybe not being so greedy in the future might be in order.

I'm sorry but I'm with the company on this one. Had they spread their miles around it wouldn't have been an issue. But the program was never designed to give any one person 350K+ of free DMs. This is a business... not a charity.

 

[US1YFARE]

And there's a huge difference between 'taking advantage' of coupons and exploiting a loophole for personal gain. These folks didn't just take advantage of a promotional discount, they copied their 'coupon' and shared it with friends who then in turn copied their 'coupon' and shared it back who then took that coupon and copied it and shared it back. You go see what happens if you try this creative approach to taking advantage of a promotional discount at your local supermarket.

Coupons generally have a statement printed on them that copying is prohibited. It seems to me, without knowing all of the information, that this is really about US believing that someone sold miles. The whole back and forth thing happens with bunches of promotions because someone didn't think it through on the promoter's side. What is wrong with exploiting loopholes for personal gain--we do it every year when we file our taxes. What I'd be interested in knowing is whether there has there been a situation where someone maximized their mileage earning under the program, but did not have an award ticket issued in someone else's name, and US did not confiscate the miles?

 

[SparrowHawk]

I'm sorry, but I don't buy the 'might not have known it was wrong' approach to guilt free living.

And there's a huge difference between 'taking advantage' of coupons and exploiting a loophole for personal gain. These folks didn't just take advantage of a promotional discount, they copied their 'coupon' and shared it with friends who then in turn copied their 'coupon' and shared it back who then took that coupon and copied it and shared it back. You go see what happens if you try this creative approach to taking advantage of a promotional discount at your local supermarket.

Had these folks simply been satisfied with their 150,000 miles from their first transactions with their single friend, or better yet utilized different friends to share their miles with (aka spread that 350,000 miles over more friends as the 'promotional discount' was designed to do) there would be no problem.

These folks tried to fill their greedy pockets, got caught, and now wish to blame the company for not allowing them to do it. They broke the rules, or even the intent, of a private program they chose to participate in. How much did they spend on this program that gave them the 150k miles to begin with?

You may call being punished for being caught with your hand in the cookie jar 'illegal' - I call it 'taking responsibility for your mistakes'. Perhaps maybe not being so greedy in the future might be in order.

I'm sorry but I'm with the company on this one. Had they spread their miles around it wouldn't have been an issue. But the program was never designed to give any one person 350K+ of free DMs. This is a business... not a charity.

Well if you're "With" the company then you've sided with Liars, Cheats and Thieves. Let me show you landed in my Inbox.

From: REDACTED
Sent: Monday, June 07, 2010 3:49 PM
To: Mr X
Subject: RE: PNR REDACTED


Mr. X,
You will not be contacted by phone from this Department.

Specifics deleted to protect DM member

Any future emails sent to other US Airways departments will be forward to Corporate Security for a response. This has been noted in all accounts.

MS B*tch
US Airways
Corporate Security
Fraud Analyst

I was able to get this issue addressed to the customers moderate satisfaction. ust the tone alone is offensive in nature and I can tell you that is this particular case US Airways was ham handed, arrogant and DEAD WRONG.

 

[BoeingBoy]

What I'd be interested in knowing is whether there has there been a situation where someone maximized their mileage earning under the program, but did not have an award ticket issued in someone else's name, and US did not confiscate the miles?

Presumably plenty of people. Either that are they're just not saying anything on FT (possibly because about 25% of responses are of the "if US did that you must be guilty" variety). As these promotions have been going on, plenty of FTer's offered various ways to maximize the bonus miles earned, but few have come forward there to even say that their account has been frozen pending the outcome of an audit.

On the other hand, at least one DM member did not use exchanges between 3-4 accounts to maximize miles - just her and her husband's to get the 50K bonus miles from one promotion - and has not redeemed miles for an award ticket but had their accounts closed and miles confiscated.

Jim

 

[BoeingBoy]

Had these folks simply been satisfied with their 150,000 miles from their first transactions with their single friend, or better yet utilized different friends to share their miles with (aka spread that 350,000 miles over more friends as the 'promotional discount' was designed to do) there would be no problem.

Some did exactly that - valid under the terms and conditions that US wrote - and had their account(s) closed and miles confiscated. Others, who did the same thing, have not reported any problem.

These folks tried to fill their greedy pockets, got caught, and now wish to blame the company for not allowing them to do it. They broke the rules, or even the intent, of a private program they chose to participate in. How much did they spend on this program that gave them the 150k miles to begin with?

So doing only what US' rules said was valid is breaking the rules? The intent - how do you know what the intent was? Are you the one that came up with these promos and now have to explain how they went wrong?

You may call being punished for being caught with your hand in the cookie jar 'illegal' - I call it 'taking responsibility for your mistakes'.

So if US wrote the rules too loosely, when are you going to hold it responsible for it's mistakes? Never, since the customer can be blamed for US' error?

Had they spread their miles around it wouldn't have been an issue. But the program was never designed to give any one person 350K+ of free DMs.

Most did - that was the only way to maximize the benefit. Yet US tells them they're guilty of breaking an unspecified rule. Again, the "design" of the program. I honestly do invite you to tell us all how you know so much about the "intent" and "design" of these near continuous promos. My guess is that US offered these promos to bring in cash, but once they realized the liability part of the equation had second thoughts and are attempting to fix the liability by confiscating the miles sold if they can find any reason to suspect fraud. Keeping the money, of course...

Jim