Originally Posted by
84fiero
AA is paid when it sells the miles to Citi. What Citi does with those miles, and whether Citi makes money or not, doesn't impact AA's profit from selling the miles.
Exactly. Talk of AA losing money because of fraudulent accounts is completely conclusory absent some actual data or argument which so far does not exist here. I have seen nothing to suggest this to be the case. Miles are fungible. There is no difference between a 'Sign-up bonus' mile and a 'Spend' mile. Citi pays the same for each.
The amusing thing in all of this is that despite the indignation at this 'rampant fraud,' AA is doing nothing to the people who actually caused it and likely set off alarms at AA. Not every new account with no Citi AA card got mailers. Let us say that there were a pool of 10,000 accounts in 2018 and Citi sent out 5000 mailers. Pretty good odds and once you got them, you normally continued to. But not everyone does and not everyone has a relative or friend to give them mailers and a growing number of people want mailers.
When mailers go single-use, people start signing up pets and alternate names, and who knows what. The market on Reddit really takes off and people are selling codes for $20-$50. As the number of accounts rise but the number of mailers remain constant, the chance of getting a mailer from an account drops and more accounts are created and demand for purchasing mailers rises.
When physical mailers stop and emailers show up, people do not even need a physical address anymore and can just create completely bogus accounts by the hundreds and thousands all with unique email addresses thanks to Google. So the 10,000 eligible accounts in 2018 (most of which don't get emailers) are now 100,000 accounts or 1,000,000 and the chance of getting an emailer requires 10, 20, 50, . . . accounts. The alleged 500 is probably the tip of the iceberg when people have 30 to sell at a shot in the Reddit market.
The people who created huge numbers of accounts are not people trying to get a code once a month, they are people making $1000s selling codes on the Marketplace and don't even have an AA account to shutdown. Not that AA is shutting down fraudulent accounts, they are just shutting the legitimate accounts associated with the fraudulent ones.