FF programs and ethics - where to draw the line?
 

Randy (and everyone else reading),

In my time on FlyerTalk (going on three years), I have observed a nearly unanimous sentiment against actions that are against the terms and conditions of (insert your preferred FFP here). Posts soliciting or advocating, say, the sale or unauthorized transfer of miles are usually slapped down by the moderators (and, by and large, the FT community) as being against the spirit of Flyertalk.

Currently, in MilesBuzz!, there is a thread on the accumulation of miles through the purchase of gift cards from Wal-Mart. Those taking part in the scheme are using their miles-earning credit cards to purchase high-dollar gift cards and then cashing them out - a practice that is against the terms and conditions of the gift card and against Wal-Mart's company policy (except in three states, where cash out of gift cards is required by law).

The moderators have seen fit to keep this thread open - I have brought this issue to them first, and the general consensus is that it is within the spirit of FT to "push the rules beyond their stated goal."

If such is the case, should no distinguishment be made between this scheme and the sale of my AA miles, if I chose to do so? In both instances, rules are being broken. Yet one is allowed to remain open for many pages (with several sub-threads having been born), and the other will get quashed as soon as the word "money" is mentioned.

Where should FT draw the line? Is it okay to advocate breaking the rules part of the time? Or can I start selling my miles on Coupon Connection now? ;)

Mike

Isnt that the point of ethics? If you think others are doing something wrong, it isnt a valid reason to do it also (or something else you think is wrong).

I agree with what you're saying - but consider the following scenario:

I'm hard up for money, and I know I can make some quick cash by selling off some of my miles. And I don't really see a problem with that.

As soon as I post my offer to sell on FT, it will be shut down - regardless of the ethics of it. It's against the T&C of the airlines, so FT is not a party to it.

So in another instance where a FT-discussed activity is against the rules, why does it remain? That's the question I'm trying to get at.

Mike

Good question really.

There are 788 posts on that one and 41,372 page views, so it seems clear it is a subject of enormous interest to FT'ers. Perhaps it really does boil down to a conscience thing for each individual in the end?

If WalMart or Charter One etc wanted to stop it, a memo prohibiting this route would surely kill it dead? These things are all closed down eventually and folks like FT'ers are usually the ones to have seen the loophole, and used it before they do - if their conscience lets them. I am not saying that facetiously, and I for one could not and would not be bothered with all the mess around and hassle for a few 1000 miles and have not bothered, but I know many others have.

Knowing my luck they'd retroactively charge me some extra new fee per gift card transaction, making the miles not so 'cheap'. ;)

http://www.flyertalk.com/forum/showt...?t=9573&page=1

nako - the current thread in Miles Buzz "Fraudulent collection of miles" does cover some of that area, and I found this post summed it up pretty well IMHO -

http://www.flyertalk.com/forum/showp...9&postcount=14

First, let me acknowledge that you did bring the thread to the attention of at least one MilesBuzz moderator (though I don't think I was that one), the concern was shared with me because it warranted some real thought, and I suppose reasonable people can differ on the judgment about leaving things open that may violate a program's terms and conditions.

Second, let me also say I respect your decision to bring this issue to Randy's attention, he is certainly entitled to take a different view from the moderators if he wishes and I for one will follow his lead.

I actually think this is a pretty good discussion, so I'll share some thoughts that are mine personally.

My own knowledge is a bit limited with respect to the terms and conditions that Walmart may have on their products, and how their own practices differ from their stated terms. With an airline program I'm pretty confident I know what is and is not within the bounds of acceptability, and my lack of expertise probably limits me and my willingness to intercede in a thread. I'd just assume let folks educate each other on the subject. I also think it's worth discussing whether Walmart enforces its Terms & Conditions or whether their actions differ substantially in practice from their words on a page. And that's a meaningful distinction, I think. Just as it's worth discussing "Can I sell my miles? What would be the consequences?" and that is materially different from a post soliciting the sale of miles in, say, Coupon Connection. Flyertalk isn't a forum for sale, but Flyertalk certainly is a place where you can discuss whether sale/barter/exchange is okay or not. And where it's possible to discuss what's in and outside of the bounds of a program's rule, whether those rules are enforced, etc.

In the case of this particular thread, I don't think the answer is to close it. I think the answer is for you (or anyone else) to say "this is actually against Walmart's policy in 48 states. Seems unfair to abuse the policy. You might even get an employee in trouble if they do what you ask. Crosses a line for me that I think shouldn't be crossed."

That would be a very reasonable post. But it doesn't seem outside the TOS of Flyertalk to have that discussion.

Going perhaps a bit too meta and beyond the scope of anything that would actually bear on a decision regarding any particular thread on Flyertalk (but that I still think is interesting), I believe that posts pushing the envelope on promotions and loopholes serve a very real economic purpose: by exploiting and exposing loopholes, companies are forced to get better. They're forced to think through promotions. They're forced to improve their computer programming. These are things that I fervently believe make commerce stronger. Now, that doesn't say anything about whether an individual action is justified in any given circumstance. That broad claim about the world likely says little about individual ethics. But Flyertalk broadly, by serving as a forum to expose poorly thought-through corporate practices makes those practices better. Some companies may not like that, after all THEY are the ones having a fire lit under themselves and bearing the cost. But I know I sleep just fine at night knowing what's posted here.

We all need to police our own actions and share our reasoning in order to persuade other Flyertalkers of our position and that will do more to clean up the ethics of miles and points than shutting down discussions. This is not an absolute statement, there are times when closing a thread seems appropriate, there may be a subjective element to it. But these are interesting enough ideas that I thought I'd share my own thinking in its inchoate form. But don't quote this against me when I act later as a moderator! There ARE some things considered verboten on Flyertalk, I'll try to act on those, notwithstanding the implications of some of my personal opinions here!

Best,
Gary

Nope... you can't.... :)

Against the T&C of the Coupon Connection.

William

Thanks for posting the link to that post. I'd have addressed it in that thread itself, but the general attitude of that thread has prevented me from posting further.

I think the question that was asked and the answer given by Ken in Phx oversimplifies the issue with the Wal-Mart card. It's more applicable, say, to the Charter One card scenario, where cashing out the card is an advertised feature of the card.

With the Wal-Mart card, however, it's not. In fact, it's specifically stated on their cards that you cannot cash out their gift cards (unless the store is required to by law). By purchasing that card, you accept Wal-Mart's offer under their terms.

The fact that many Wal-Mart employees do not follow this policy does not negate the fact that the purchaser of the card is violating their end of the agreement simply by asking for the card to be cashed out in the first place. Whether that necessarily constitutes "fraud" is highly debatable - that was the context under which the question was asked.

Nonetheless, something doesn't have to constitute fraud to be wrong from an ethical standpoint. Selling miles isn't necessarily fraudulent, either - but I and the bulk of FT don't engage in it because we think it's wrong (and against the rules).

Mike

I hardly can judge other's ethics (regarding airline-/hotel-frequent-flier/-guests programs)- I don't want to be the judge.

As long as the written 'official' rules of such programs are as onesided as most of them are, I personally draw the line for myself and for sharing experiences/tips that some may find unethical on this board extremely wide ...

In the early days of FlyerTalk nobody ever did protest against any of my posted approximatly 50 guerilla tips, how to beat the airline's (frequent-flier-) system! Randy's magazine editor than even asked me, if they could use some of those tips in their publications.

Bumping this because, with the advent of a new MilesBuzz thread that has turned to the potential of violating federal tax laws for the purpose of gaining miles, I think it's an issue that should be addressed.

See this thread.

Mike

I recommend anyone wanting a reason/stimulus to doze off to sleep for a few hours has a read. Talk abut dry and boring. :)

Bottom line - if he tries it he will 99% sure have a nasty IRS audit in very quick time. I doubt anyone here will be rushing into that one.

Well then, one assumes (and hopes) that there is no equivalent to the IRS in Australia:

I'm not sure how you get "violating tax laws". As the professionals on the thread itself say, it's not a tax violation.

Perhaps a violation of the agreement with the credit card company, but that's another matter (buying gift cards with the intent to cash them out might also arguably violate the "cash advance" rules).

One of the posted schemes (in fact, the one that prompted me to post here) involves paying yourself a $5000 consulting fee, then writing the whole thing off as a travel expense. Unless one can prove that this is an ordinary and necessary expense, then it is not legal to do. The tax professionals were not talking about this part, I don't believe.

Nonetheless, it's also against the merchant agreements of the credit cards. But I suppose that's not enough to warrant being closed - see the Wal-Mart thread. But I wonder why we only care about the rules around here when it may come around to bite us or when it has to do with the airlines.

I'm certain that lots of people will come back and say that this is the nature of FT - to find loopholes and use them. But the people who say this are confusing the idea of a loophole.

A loophole is generally defined as a way through or around a contract or deal, thanks to an omission or ambiguity in the contract or rules. Using mileage-earning debit cards to buy money orders, for example, was a loophole, because Bank of America did not specifically prohibit the activity.

Wal-Mart doesn't allow their gift cards to be cashed out. Credit cards don't allow you to charge your own credit card as a merchant. These, therefore, are not loopholes, because they are directly against the rules. There is no omission or ambiguity.

I'm certain, though, that the vast majority of people here don't really care, until it hurts them somehow.

I'm done. Period.

Mike

In the thread in question, a FTer has an idea. They may or may not know it violates various rules, whether IRS rules or credit card merchant agreements.

A bunch of FTers react to the proposal, bringing their knowledge to the table about whether the idea is possible, whether it's legal, whether it's ethical, etc.

And pretty much the universal consensus in this case is that the poster's idea isn't going to fly - for both practical and legal reasons.

This seems like precisely the kind of thing that deserves discussion, and is served by by not closing the thread. Both the original poster and many other FTers were educated about something that no doubt others have thought of before.

I guess I don't know how we would have been better off with the discussion closed off at the outset.

Regards,
Gary
aka gleff
MilesBuzz and Delta moderator