Often1

UA's interest is satisfied:

1. GPU's voided
2. MP Account zeroed out and closed
3. Unused award tickets cancelled
4. Presumably UA goes back and collects the value of fraudulently-issued tickets and other items of value

For those who think that this is a victimless crime, it is far from it. Ticket brokers sell what they market as discounted premium tickets to rubes who buy them and divert revenue from UA. To the extent that there is a fraud which works, there is someone who would have paid cash to UA for a premium ticket and who did not. Have this happen once or twice and it may not be a big deal. But, when it becomes a commercial operation, it is a big deal.

COSPILOT

Time is money, it can be a bank chasing fraud, a airline, etc. There is a cutoff at which it cost more to investigate than the return. Every company has a finite amount of resources to chase the fraud, and as such some are ignored. As I have sold software to identify fraud, the key is like anything in business, if one can sell a solution that can lower the cost of doing business you can lower the dollar amount at which you will take time to investigate the fraud. Because the investment in fraud detection isn't free, every company has to decide what are priorities. The OP got caught because he exceeded that secret # that UA will never share, nor should they.

Steve M

I have to disagree. Yes, they could go back a few years, but likely will? Doubtful. In fact, I think it's extremely unlikely that they will do so.

Consider the situation as it is now: UA, in its sole discretion, gets to decide a) who has violated the rules, and b) what the penalty is, all without any burden of proof and with no oversight. All participants in MileagePlus have agreed to this situation by their participation. It will likely continue this way until and unless there is a pattern of abuse from UA's side. But especially in the case presented in this thread recently, the member by his own admission blatantly violated the rules by selling a GPU. If UA goes after all similarly-situated people, they are going to get no sympathy from any court, regulator, and probably not much of the popular press. If they someday start entrapping people, or taking away miles from people who have done no wrong, then it may rise to the level where some external authority does something about it, but there's no indication that anything near this has or will happen.

Compare this to what happens if they try to take someone to court to pursue damages - the tables are turned: UA would have the burden of proof. Plus, there's a chance that a decision goes against them and sets a precedent going forward. And even if they get a judgement, they have to find a way to collect, and many individuals that do things like this are "collection-proof" as they say.

UA is in a much better position with things as they are now. I highly doubt that they'd actively pursue anyone in civil or criminal court for MileagePlus T&C violations.

Thinking about how this relates to fare rule violations, we kind of have a similar situation: although they can theoretically go after someone in civil court for the "damage" of the difference between the fare actually paid and what should have been paid, they almost never do so. Have they ever done so? For individuals, they do something similar to this situation: they use MileagePlus as their hammer and leave the cash damages alone. For travel agencies, they issue a debit memo against commissions, and/or take away the ability to issue UA tickets. For corporate accounts, they take it out of the earned fare rebate at the end of the year, or reduce the rebate going forward. In each case, they can act unilaterally, and in my opinion, very purposefully avoid situations that put burden of proof on their side.

Often1

Not likely that UA has to sue to collect. Defending yourself in a civil case is not free and it's not as though you are in front of some SCC judge. Even if UA sues, this likely winds up as summary judgment as the contract conditions are pretty clear. If the fraudster is in business or on business travel paid by an employer, chances are the employer makes it right and deals with the employee.

The fraud guy here could be a leisure traveler spending his own money, but GS with GPU's to spare could well be a corporate contract. All that takes is UA calling the employer and asking for the money.

EMan

Agreed.......That's what UA is actively doing.

Agreed.........I don't think UA would do that.

I agree that it's crazy but the fact is that only 1K/GS flyers earn GPUs and in my personal knowledge of 2 cases, a 1K and a GS, UA ran them off.......I don't understand the business side of that but they can save, in the short term anyways, a considerable amount of money by closing a GS MP account along with all the benefits. We know Jeff's background is legal.......Maybe he wants to show the top flyers who's boss. I personally don't get that strategy.

For example, they could email all the GPU sellers, telling them what would happen if they sold/bartered their GPUs. I think that would take one person at most a week to do that. That's called PR, Jeff.

Steve M

I think that would be BAD PR - many people would interpret that in an accusatory manner. Besides, in the case we're talking about here, the person already knew it was wrong, as evidenced by their attempts to obfuscate the nature of the transaction.

Also, the economic benefits of canceling the MP miles and benefits would be much longer term than the potential immediate revenue loss if the 1K/GS were to take their revenue flights elsewhere, as I imagine that many would. If UA were seeking short-term economic gain, this would not be the way to do it.

MSPeconomist

We don't know the duration or magnitude of the person's "little" business of selling advice with the free GPU or RPU included. For all we know, it's not just the GS selling his/her own GPUs/RPUs but someone who has been buying them from others (or bartering to get them from others), although the posts don't mention that any family members are having their accounts closed. This could be some established broker.

Steve M

I don't understand the above assertion that you keep making. Where exactly is the "considerable amount of money" that UA can save by closing a GS MP account? The free upgrade benefits aren't given out until all chances of revenue purchases are exhausted, and even then, there's almost always someone of a lower tier that would get the seat but for a GS. GPUs do save the user from a co-pay, but in many cases, it's a false savings, because you have to buy up to a W fare to use them, and the fare difference is often in line with what the co-pay would have been. Since everyone is always complaining about award seat inventory, it's fair to say that any award redemption on UA that is eliminated by canceling a high-balance MP account is going to be replaced by another member's redemption.

Reduction of the obligations on the books of UA to the MP member for their earned benefits is tiny in the big scheme of things. And to the extent they happen, they only serve to improve the balance sheet, but they do nothing to the all-important bottom line of earnings. That is, reducing a future liability to an MP member doesn't affect earnings one way or the other, as no additional revenue was gained, nor cost reduced by doing so - only a future obligation is wiped out.

About the only way I see that canceling an MP account benefiting UA's bottom line directly is if you assume that the miles otherwise would have been redeemed on a partner airline, for which UA must pay cash (either directly, or as a reduced offset for money coming the other way).

But let's take a look at the situation that we've been talking about here recently: GS member, with 1.5m lifetime miles. Let's assume that he spends $30k/year on airfare with UA in order to get GS status, and let's assume that he has 1 million miles in his bank (as he's probably spent some of his miles). I think a fair guess as to what UA pays partner airlines for redemptions is $0.01/mile. At that rate, UA saves a potential $10,000 payment to partner airlines if the flyer were to redeem all of his 1mm miles on a partner this year. But by running him off, they forgo $30,000 of revenue, and that's just in the first year.

I just don't see a scenario where even in the short term UA comes out ahead by canceling a GS MP account, if you assume that the member will take their revenue flights elsewhere (which I think is a reasonable assumption). So, I don't see there being any motivation to UA to taking these actions that is based on short-term cost savings from removing accumulated benefits to the member. What am I missing?

dayone

It's been suggested elsewhere that the inter-airline transfer rate is less than that, perhaps $0.006 or less.

porciuscato

Your analysis is cogent and spot on.

Here's what you're missing: United views the business as a zero-sum game at the simplest level. Something that benefits the customer must harm UAL. Something that harms the customer must benefit UAL. Profit is a secondary objective; if you hurt the customer, profits will assuredly follow.

That's why I find all the pious, pompous pontificating in this thread nauseating. Yes, the OP did a foolish and deceitful thing. Yes, he deserved some penalty. However, UAL devoting resources to track him down and punish him severely is a little like putting a guy in a choke-hold because he sold illegal cigarettes on the streets of NYC. Ultimately it will do little for UAL except confirm its status as a nasty vindictive company.

Steve M

Where are you getting this? Where is this coming from? This buys into the whole notion of UA having people at HQ that are actively scheming as to how to best screw the passenger. Although some of the decisions end up being counter-productive in the long term, I see very few things, if any, that would lead me to believe that UA management is actively trying to harm their best passengers on purpose.

I can believe it. My best guess as to the actual number was $0.008. The lower the number, the less the argument makes sense that UA would cancel a high-revenue MP account in order to benefit the bottom line. I used $0.01 to give the greatest benefit of doubt to the argument, and it still comes up way short.

Kacee

AA is far more aggressive than UA in tracking down frequent flyer abuses. So much so that offers of AA miles, certs, etc. are no longer permitted on Coupon Connection.

If the rules are not enforced, the system breaks down. It's good to know that UA will (at least in this instance) enforce its rules equally, no matter how profitable the customer violating those rules may be.

kettle1

I agree 100% and other carriers are watching. eBay has set up warnings for the same type listings. OP (if listed on eBay) could loose status on both UA and eBay.

Happy travels - with zero status and I do not believe "buyer protection" works on these types of auctions with eBay or PayPal.

OP: Please don't try to pull a fast one. Play by the rules and everyone is happy.

COSPILOT

From my perspective, I'm still not convinced that status (be it 1K or GS), had any impact as to why the OP's account was flagged.

Without giving away the farm, software that helps detect fraud looks for patterns, not status; money spent, etc.

Think about a retail location, and lets say it's easy for said retailer to figure out who are the top 5% that make the most returns, but now we combine that data with the top theft items, in addition to other things that allow the company to narrow down to just a few that combined with other evidence (such as video) make it pretty clear said individual has been defrauding the company. If, in this example, the software flags 10 people in the last 10 days in an automated way that only requires someone to review what the software came up with, it allows this retailer to spend just a few minutes instead of days to figure out if its legit or ok to dismiss.

So in the case of UA, patterns can become a problem just like any company and warrant more investigation. The OP exceeded whatever threshold UA has developed and has suffered the penalty. His GS status had nothing to do with this.

Tchiowa

One that was on e-Bay has disappeared. But now somebody else thinks he's "figured it out". He is selling "Instructions on how to get and upgrade for $250" and you pay $0.99 for the "instructions". And I'm sure the instructions include paying him.

Note that he points out he has 4 of these "instructions" that expire in January 2016.