Original Member
I just got through a heated email exchange with MCI over my discovery that they have been secretly charging me for miles at the rate of more than $1 for every 1000 miles. This charge is buried in a taxes/surcharges line item and ends up being an unadvertised increase in the per-minute call rate.
While it's not a large amount of money, I'm outraged by their reply (as usual, their customer service is wholly unsatisfying, which is why I've switched back to AT&T). Anyone interested in starting a class-action lawsuit?
Here's their response to me. My favorite line is "Moreover, a customer is presumed to have knowledge of
the filed tariff terms." Right!
-----
Thank you for contacting MCI WorldCom Online Customer Service with
questions about the federal excise tax mileage surcharge.
The government requires MCI WorldCom and all other companies that buy
airline miles to pay a federal excise tax (FET) on the cost of miles.
MCI WorldCom and other companies must pay these taxes to the airline
directly, and the airline then pays the IRS. In order to recover
these costs and continue to award the same level of miles, MCI must
pass this tax on to airline program customers as a surcharge. This
charge is tariffed by the FCC.
This surcharge appears on the Federal, State and Local Surcharges line
of your invoice along with other nominal taxes and surcharges. After
your airline partner has confirmed posting of miles to your frequent
flyer account, this surcharge is applied. This surcharge appears on
your invoice at least one month after you earn the miles.
While we are sorry that these surcharges were not explained to you
up front, these charges are located in our tariff filed with the fcc.
A customer's relationship with MCI WorldCom is governed under the
terms of MCI WorldCom's tariff, which sets forth its rates,
practices, classifications, and regulations for and in connection
with its communications services. The content of the tariff is
subject to Federal Communications Commission ("FCC") regulation.
The tariff has the force and effect of law and is not merely a
contract. Moreover, a customer is presumed to have knowledge of
the filed tariff terms.
We appreciate the opportunity to service you online. MCI WorldCom
strives to provide you with the highest quality of customer service
and is committed to bringing you new and innovative ways to keep in
touch with your family members and friends. If you have any
additional questions or concerns, please visit MCI WorldCom Online
Account Manager at www.mci.com/service.
Sincerely
John
Online Customer Service
While it's not a large amount of money, I'm outraged by their reply (as usual, their customer service is wholly unsatisfying, which is why I've switched back to AT&T). Anyone interested in starting a class-action lawsuit?
Here's their response to me. My favorite line is "Moreover, a customer is presumed to have knowledge of
the filed tariff terms." Right!
-----
Thank you for contacting MCI WorldCom Online Customer Service with
questions about the federal excise tax mileage surcharge.
The government requires MCI WorldCom and all other companies that buy
airline miles to pay a federal excise tax (FET) on the cost of miles.
MCI WorldCom and other companies must pay these taxes to the airline
directly, and the airline then pays the IRS. In order to recover
these costs and continue to award the same level of miles, MCI must
pass this tax on to airline program customers as a surcharge. This
charge is tariffed by the FCC.
This surcharge appears on the Federal, State and Local Surcharges line
of your invoice along with other nominal taxes and surcharges. After
your airline partner has confirmed posting of miles to your frequent
flyer account, this surcharge is applied. This surcharge appears on
your invoice at least one month after you earn the miles.
While we are sorry that these surcharges were not explained to you
up front, these charges are located in our tariff filed with the fcc.
A customer's relationship with MCI WorldCom is governed under the
terms of MCI WorldCom's tariff, which sets forth its rates,
practices, classifications, and regulations for and in connection
with its communications services. The content of the tariff is
subject to Federal Communications Commission ("FCC") regulation.
The tariff has the force and effect of law and is not merely a
contract. Moreover, a customer is presumed to have knowledge of
the filed tariff terms.
We appreciate the opportunity to service you online. MCI WorldCom
strives to provide you with the highest quality of customer service
and is committed to bringing you new and innovative ways to keep in
touch with your family members and friends. If you have any
additional questions or concerns, please visit MCI WorldCom Online
Account Manager at www.mci.com/service.
Sincerely
John
Online Customer Service
Original Member
This is one of many reasons I stopped dealing with MCI some time ago. The miles aren't worth it.
Perhaps it is not worth having MCI for the long run but certainly bouncing between Sprint and MCI to put big bonuses into your mileage accounts as well as those in your family is worth it.
After I collect all my month bonuses, I plan to switch to Cable & Wireless (this is my internet provider -- www.cwix.com) which will charge only .07 per minute weekdays and .05 on Sunday. Since miles are worth .02 each, it is obvious that you are paying for the miles after the big bonuses anyway. Cable & Wireless can be contacted at 888-724-8143.
After I collect all my month bonuses, I plan to switch to Cable & Wireless (this is my internet provider -- www.cwix.com) which will charge only .07 per minute weekdays and .05 on Sunday. Since miles are worth .02 each, it is obvious that you are paying for the miles after the big bonuses anyway. Cable & Wireless can be contacted at 888-724-8143.
I'm certainly not one to stand up for MCI customer service, but they have to break the information out that way. Your not actually paying for the miles, but the tax on the miles. This is due to miles that are sold being taxable. If you rent from Hertz, you'll see them the same thing. As for pricing, I think 9 cents a minute all the time plus 5 cents on weekends plus regular miles + the 25M bonus makes it worth sticking with them.
I understand why the miles are taxable, and that is without dispute. The line about requiring the customer to pay for it is a complete and total crock.
I worked for a large insurance company several years ago, and a mistake by the company resulted in incorrect withholding from a few customers' accounts. These were very BIG customers who did a LOT of business with us, and coming back to charge them some tax would (1) annoy the customers and (2) not exactly look good for the company.
The company made a decision that rather than risk alienating the customers and losing their business, they'd just eat the tax expense. They paid the IRS and the customers were never the wiser. The IRS didn't care, they got their money.
Bottom line, the IRS just wants the tax on these miles. They don't care who pays it, so long as they get their money.
MCI is just "spinning" (after all, no one LIES anymore).
I worked for a large insurance company several years ago, and a mistake by the company resulted in incorrect withholding from a few customers' accounts. These were very BIG customers who did a LOT of business with us, and coming back to charge them some tax would (1) annoy the customers and (2) not exactly look good for the company.
The company made a decision that rather than risk alienating the customers and losing their business, they'd just eat the tax expense. They paid the IRS and the customers were never the wiser. The IRS didn't care, they got their money.
Bottom line, the IRS just wants the tax on these miles. They don't care who pays it, so long as they get their money.
MCI is just "spinning" (after all, no one LIES anymore).
FlyerTalk Evangelist
JonToners first paragraph is right on. If they are offering "free" miles, they should be just that...free. MCI should absorb all related costs (taxes, admin, the cost of the miles paid to the airline, etc). The only taxes we should have to pay are those that are levied directly on us by the government(such as taxes on a contest win). What a crock is right. I have just cancelled my service with MCI and will later today write to United's Mileage Plus and express my displeasure at being taking in by this outfit.
Geez, Pemex, I'd call that an honorable sacrafice of miles based on principle...but since the miles are NEVER posted without a fight, I don't thing you're giving up much more than a headache (see also UAMP Dining program) 
Original Member
In the long run, MCI stinks. Period.
'Course that depends on what your definition of is is
urp
'Course that depends on what your definition of is is
urp
Some smells rotten in the state of MCI (a play on Shakesphere's Hamlet.)
I did NOT sign up for MCI for many reasons but I'm wondering for those who did... did they send you a contract with 800 provisions (including presumingly a line that says "for ever 1000 miles we will be forced to impose an excise tax on the miles as a service.)
On my AT&T bill I pay like 75 cents as a special excise tax for long distance. It's spelled out and I got a warning of it in a mailing. DID MCI DO THIS???
Or in the ad did they have a little * or curley cue saying "For every 1000 miles we will have to charge 1 dollar tax."
Curious to know if MCI spell it out.
I don't know if it was spelled out, or if enough people are angry enough that they can file a suit (I can hear MCI saying "Oh it's only a dollar or so.) But it's the principal of the thing.
I did NOT sign up for MCI for many reasons but I'm wondering for those who did... did they send you a contract with 800 provisions (including presumingly a line that says "for ever 1000 miles we will be forced to impose an excise tax on the miles as a service.)
On my AT&T bill I pay like 75 cents as a special excise tax for long distance. It's spelled out and I got a warning of it in a mailing. DID MCI DO THIS???
Or in the ad did they have a little * or curley cue saying "For every 1000 miles we will have to charge 1 dollar tax."
Curious to know if MCI spell it out.
I don't know if it was spelled out, or if enough people are angry enough that they can file a suit (I can hear MCI saying "Oh it's only a dollar or so.) But it's the principal of the thing.
And Quiet Lion... you have a right to ROAR over this fee. (sorry about the cliche) Very very sneakly of MCI.
Again, I'm curious to know if MCI spelled it out. (NOT that I'll give up AT&T if they did!)
I would say an excellent OMNI worthy post by our friend the LION>
[This message has been edited by Catman (edited 04-21-99).]
Again, I'm curious to know if MCI spelled it out. (NOT that I'll give up AT&T if they did!)
I would say an excellent OMNI worthy post by our friend the LION>
[This message has been edited by Catman (edited 04-21-99).]
Original Member
TAANSTAAFL (There ain't no such thing as a free lunch), to quote Robert Heinlein. I for one was never under the impression that frequent flyer miles were 'free.' They are simply a rebate of some portion of a fee one is paying. Like it or not, as a customer if MCI (or anyone else) gives you miles or any other discount/rebate/reward, you will eventually pay for it in the form of higher prices--whether explicitly or implicitly.
I for one would prefer to have the cost itemized out as a tax rather than pay higher long distance rates (the other option), because then if I don't want the miles I myself recapture that money, rather than have MCI just pocket the difference. Thus, a user tax is actually quite fair in this respect. By having it itemized out I personally can calculate whether or not this cost is worth the benefit; if it is wrapped in to some other fee, this transparency is lost. That said, I will fault MCI for not disclosing what this line-item covers; they have had enough asterisks about the various Universal Service Fees, etc. that one more would hardly hurt!
I know we all like to think of FFB miles as 'free', but like it or not somewhere along the line we pay for them. Do you want to hazard a guess as to what ticket prices would do if all airlines collectively did away with loyalty programs (of course, none of us wants that, since the entire game is thatmost of us often fly on an expense account, in which someone else bears the direct cost and is usually less price-sensitive).
If you don't think the cost is worth the benefit, find a better package of services (as MileageAddict and others have done); that is what is wonderful about a market economy.
Apologies for the length of the message, and I too have complaints about MCI's customer service, but I also deal enough Russia at work that I have come to greatly value transparency and accountability--which is what MCI is in fact trying to promote with this practice.
I for one would prefer to have the cost itemized out as a tax rather than pay higher long distance rates (the other option), because then if I don't want the miles I myself recapture that money, rather than have MCI just pocket the difference. Thus, a user tax is actually quite fair in this respect. By having it itemized out I personally can calculate whether or not this cost is worth the benefit; if it is wrapped in to some other fee, this transparency is lost. That said, I will fault MCI for not disclosing what this line-item covers; they have had enough asterisks about the various Universal Service Fees, etc. that one more would hardly hurt!
I know we all like to think of FFB miles as 'free', but like it or not somewhere along the line we pay for them. Do you want to hazard a guess as to what ticket prices would do if all airlines collectively did away with loyalty programs (of course, none of us wants that, since the entire game is thatmost of us often fly on an expense account, in which someone else bears the direct cost and is usually less price-sensitive).
If you don't think the cost is worth the benefit, find a better package of services (as MileageAddict and others have done); that is what is wonderful about a market economy.
Apologies for the length of the message, and I too have complaints about MCI's customer service, but I also deal enough Russia at work that I have come to greatly value transparency and accountability--which is what MCI is in fact trying to promote with this practice.
Original Member
Catman, thanks and MEOW... us cats have to stick together. Jon Toner and PremEx, thanks for the support.
MileageAddict, chalf and flingo, I agree someone has to pay for the miles... it's just that MCI was sneaking in the charge without telling anyone, and then having the effrontery to say that they were REQUIRED to pass on the charge to the customer which is a crock of cat biscuits!
MileageAddict, chalf and flingo, I agree someone has to pay for the miles... it's just that MCI was sneaking in the charge without telling anyone, and then having the effrontery to say that they were REQUIRED to pass on the charge to the customer which is a crock of cat biscuits!
Original Member
Of course any company has a right to pass along anything it wants to consumers, unless they are being deceptive. I think that if a company says it will give you 1,000 miles, or 5,000 miles, or 25,000 miles for signing up for their service, that it is an unfair trade practice not to disclose this to the customer. It matters not a whit that they have filed a tariff with the FCC authorizing them to pass along the tax. If MCI posted a tariff saying it was going to charge $10,000 per frequent traveler mile, does anyone think they could get away with it by saying they had filed with the FCC?? Of course not. The charge needs to be disclosed to the consumer at the time the consumer decides whether or not to purchase the telephone service.
Ever since I got into a dispute with Hertz this summer about their passing along the 7.5% tax on 30 Skymiles on a rental, with the amount of the tax being five cents, I have puzzled about WHY they would want to alienate customers in roder to make a nickel? Since then, when I have rented from Hertz, I have just asked for Marriott counter points since there is not federal tax on those (yet). Most of the time, I just rent from a competitor. They have already lost the nickel many times over. They don't care.
Ever since I got into a dispute with Hertz this summer about their passing along the 7.5% tax on 30 Skymiles on a rental, with the amount of the tax being five cents, I have puzzled about WHY they would want to alienate customers in roder to make a nickel? Since then, when I have rented from Hertz, I have just asked for Marriott counter points since there is not federal tax on those (yet). Most of the time, I just rent from a competitor. They have already lost the nickel many times over. They don't care.