An FYI for us all!
 

Earlier today I bought a $15 gift cert as my 10th (and final) transaction for DL's promo that ends tomorrow. I asked the owner, "So, it seems you decided to drop Alaska, and keep all the other airlines?" He replied, "It didn't quite work that way." He went on to explain that he had complained to the RN regional rep that he found the 50% drainoff to be far more of a burden than he'd anticipated and that he was extremely unhappy (to say the least) with the way things were working out for him. The rep replied, "We can 'remove a partner' [unspecified at that time] to free up some more revenue for you." The owner and I agreed that RN unilaterally decided to knock out AS to make the owner happiest, in the short term, since that was likely the highest-volume partner.
Far from happy, the more he and I talked today, the more hostile he became towards the program and RN management. I had not realized there is a lawsuit pending in CA to shut down Rewards Network from operating there as a [de facto] "lender" without being registered by the state to do in accordance with their laws. I gather this owner cannot afford to break his contract, so is looking to get out of it by seeing RN run out of business. He seemed optimistic that this might occur in the near future.

Apologies if this seems like a duplicate thread, but I thought it is a more far-reaching discussion than the one I started earlier.

Well if it's a lawsuit by the Attorney General then RN should be worried, but if it's just a suit by restaurant trying to get out of repaying (or allegations by other creditors in a restaurant bankruptcy case) then they might be ok. I remember seeing a newspaper correction retracting its characterization of idine money as a "loan" to the restaurant. There was some strange term for it instead. At the time I wondered why someone (presumably iDine) would care enough to insist on a correction.

I wonder if RN's auditors viewed the risk of this suit to be material and therefore made it a foonote to the 10-Q or 10-K.

My gut feeling is that if payday loans at massive effective rates, and those H&R Block refund advances, are legal in California, then the iDine program will probably be ok, though maybe there will be higher litigation expenses in their future.

Anyone know what the forum-selection clause in the iDine agreement specifies as the governing state law?

Potentially devastating:
 

A U.S. District Court judge here has granted class-action status to a lawsuit by three local restaurateurs who allege that discount-dining promoter Rewards Network Inc. violated California usury laws by charging excessive loan interest.

The Oct. 11 ruling could add 3,000 to 5,000 California restaurant operators as co-plaintiffs and open the door for damage claims of up to $300 million, attorneys in the case said.

The complaint, first filed in state court here in May 2004, claims the Chicago-based defendant, operating as iDine Restaurant Rewards Network Inc. and Transmedia Restaurant Co., preys on financially vulnerable operators. The plaintiffs charge that Rewards Network runs a "loan-sharking operation" by offering cash advances that are little more than loans that must be paid back with 100-percent interest in the form of food-and-beverage redemptions by dining-club members.

California law prohibits non-licensed lenders from charging annual rates exceeding 10 percent.

Any California restaurant operator who participated in the defendant's cash advance program between May 2000 and May 2004 may be eligible to join the complaint. Damages in the case could reach $100 million to $300 million, plaintiffs' co-counsel Anat Levy of Beverly Hills said. A trial date is set for April 24, 2006. Levy said she and co-counsel Dan Brockett of Quiun Emanuel Urquhart Oliver & Hedges in Los Angeles are looking at the potential for lawsuits in other states with similar usury laws.

In a Securities and Exchange Commission filing following the ruling, Rewards Network officials called the lawsuit "without merit" and stated plans to defend vigorously against it. "The ultimate cost to the corporation from this action is not possible to predict and may not be determined for a number of years," said the filing by Bryan Adel, Rewards Network's senior vice president and general counsel.

The plaintiffs who originated the lawsuit are Tournesol Bistro of Studio City, owned by Patrice Lambert; the now-defunct Gray Whale in Malibu, owned by Thomas Averna; and Minibar Lounge in Studio City, owned by Rebekah Barrows.

http://www.findarticles.com/p/articl...9/ai_n15777571


See also "Judge grants class status in Rewards Network suit":

http://www.chicagobusiness.com/cgi-bin/news.pl?id=18151

If this class action suit goes through, it may be the end if idine/RN! :(

And this is only California - what about more class action suits in the other 49 states, and Canada? :eek: :(

As long as I get my triple bonus before they shut down, I'll be happy ;)

I still haven't seen the fourth quarter bonus, let alone the triple miles from the first quarter.

Mike

Really? I got that a long while ago (Post date shows as 12/16, but it posted in Jan at the latest). Time to call iDine, methinks.

Geez, I have been able to count on idine pretty consistently for an extra 2,000 or so miles a month. I hope that, if the lawsuit goes through, they will just change their incentives to the restaurants, so that they no longer will be lending money.

Ver--ry in-ter-esting :confused: !

Idine is only partially an advance-meal-purchase service. As an alternative, an individual restaurant or chain could buy & award FF miles on its own, $4 worth for each $20 spent by a customer. Then the managers would have to do the paperwork themselves with the airlines, but they already have enough headaches :eek: !

So when they pre-sell Idine $20K worth of food, they get not only the $10K check but also about $4K (2004 rules & still today for "Élite" members) worth of FF miles for their customers + advertising & promotion on the Idine Websites + CC processing normally costing 2%.

Still I must admit that it strikes me as a poor deal for restaurants in most cases, so I was pleasantly surprised :D to see that Star of Siam Thai restaurant in Chicago's River North is still an Idine member after 10 years or more!

I had a $10 lunch recently plus $1 tax (our rate here is 9.3%) plus $2 tip. If RN skimmed half, leaving the restaurateur with the the remaining $6.50, out of which he had to pass through the tax and tip, he netted barely 1/3 of the menu price! Even assuming they let him have the full tip amount to pay the server (I cannot see any way they could possibly "de-skim" the sales tax as it is included in the pre-tip amount), which I very much doubt as we get miles on the added tips, that's still a serious bite, that would get worse as diners spend more and the owner subsidizes more tax!

From an owner's perspective, it seems the program might have been tolerable back when all joints were 1x'ers. The unlimited visits, with promo frenzy, must wreak havoc with their operating budgets.

Not just the paperwork, but (a) how would they identify airline members (that's now done automatically by iDine based on CC, but I don't think an individual restaurant could do it that way). So they'd have to be set up to take FF number directly, and that would be way more hassle not just for the restaurant but for the diner too.

Second, that's a lot of negotiation. Look at how many different airline partners iDine has (and that's not counting the non-airline partners, including at least one hotel program and at least two cashback programs). The restauarnt would have to set up a deal individually with each airline (unless someone like points.com stepped in and provided an alternate restaurant points/miles service).

Looks like a judge granted summary judgment to the Plaintiffs in this case. Idine/Rewards Network is finished, IMO.

They can't continue their business with risk of these suits, and the damages from this one alone may bankrupt them.

If that's true, then we'd better get our dines in. :p

Please post a link to something that backs this up,Thanks

I don't see how one can make a definite assumption until after the monetary part is settled?