What Happens When Promotions Go Bad – A Look Into the Consequences of Manufacturing Miles

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UPDATE: February 4th, 2020

Shortly after the publication of this article, Aeroplan looks to have unlocked all accounts that were affected by the freeze. No communications between Aeroplan and it’s affected members have occurred so it is unclear as to whether or not Aeroplan has decided against further action.

Of further interest is that those that had their accounts unlocked have managed to hang onto the miles that they have accumulated through the Black Friday hotel promotion. There is the potential that those miles may be clawed back in the future pending an investigation but that is simply my speculation.

I for one am happy to see this at least temporarily resolved without the need for the nuclear option of account shutdowns.

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During my time at WestJet, I experienced first hand how difficult it is to create and launch a promotion. There are many aspects that you have to keep in mind to run a successful promotion including:

• Will this promo resonate with customers?
• Will the offer be too rich or not rich enough?
• Are there any legal requirements you need to consider (I’m looking at you Quebec)?
• Do we have enough marketing money to advertise this promo effectively?
• Is this too similar to a promotion we ran before and if so, was that promo successful?
• How do you even measure success?
• How do you know if the promo creates incremental spend?
• Will I be able to pull this promo off on top of the 12 other ones that are launching on the same day/week/month?

All these questions need to be answered along with countless more … and that’s just the beginning.

The next part is often the toughest.

How do you write the terms and conditions of the promotion such that you ensure that it isn’t abused by people that intend to game the system?

In my experience at WestJet, these terms are written by the analysts, specialists and coordinators within the Loyalty department and after they are written, they are vetted by Legal. These terms are often done along the way but if you forget about doing it or rely on previously written terms, it can lead to a LOT of problems.

In my estimation, there were a whole host of problems with a specific promotion that Aeroplan ran during the week of Black Friday 2019 which has led to an untold number of accounts being shut down.

The Promotion

During Black Friday 2019, Aeroplan ran an “under the radar promotion” that, if I were to guess, wasn’t expected to get a lot of traction.

This promotion was one of 26 promotions running concurrently during Aeroplan’s Black Friday Event. I have saved the screen capture of the promotion here for posterity but if the page is still alive, you can check out the official Aeroplan page at https://www.aeroplan.com/blackfriday2019.do?CID=INT:DSP:PRJ31000687:BANNERS:112519:120319:AEVOKEN#/.

As you can see, there were a TON of promos running during Black Friday so it’s no wonder why something might have been missed.

Take a look closely at the image above. Do you see anything missing? That’s right … the legal terms and conditions are completely missing for the promotion. Usually, you see a symbol such as an asterisk (*), ampersand (&), tilde (~) or some other symbol in superscript in the promotional language to denote that there are further legal terms that govern the promotion.

These legal references are completely missing from the hotel promotion.

The Issues

I’m no legal scholar but here’s where you start to see issues with this particular promotion.

Notice how the other promotions (AC Gift Cards and Avis rental) both have an asterisk at the end of the write-up? Well, there are a few problems here.

1. The first promotion where you Earn up to 2 miles per $1 spent on Air Canada gift cards has the incorrect reference. It should be a ± symbol but they used a * symbol. This is problematic because according to the above, the legal terms for this promotion are governed by the terms referenced by the * … and they have nothing to do with the promotion.
2. Through the use of the * in the two promotions that sandwich the hotel promo, Aeroplan demonstrates knowledge that they needed to include terms with the hotel promotion but yet, did not do so.
3. There is ambiguous language in the hotel promo – specifically the phrase “Earn 1,500 bonus miles per night on hotels booked with cash via aeroplan.com from Nov. 25 to Dec 3 (emphasis mine) – does the consumer read this as earning the bonus based on the booking itself or, as normal practice suggests, when the stay is completed? The wording seems to indicate that it’s the booking.

Does the improper reference to the terms below invalidate the rules associated with the promo or is the intent enough? Someone with some legal background is better suited to answer that question than I.

When A Crowd Sees Weakness

Imagine you are a crack team of dodgeball players and you have 12 people on your team. If you faced off against any other team in the world, you would win handily. Every single person on your team has a role to play and they play it well.

Now imagine you take that team and you match up against 1,000 smart people that have never played as a team before but that team is allowed all 1,000 players on the field at the same time.

Who’s gonna win? The team with 1,000 will win every single time.

This is what it’s like to work in a Loyalty department.

Essentially you’re facing a one to many relationship and if you aren’t on top of your game (specifically with your terms and conditions), the crowd will see blood and attack, as demonstrated by mcbg1, a user on RedFlagDeals on the Aeroplan: 1500 miles for each night booked at hotel thread.

As the thread progresses, you see a user by the name of asbraich ask the question that many had been thinking (apologies for the language):

As we move down the thread, we see a couple of things happen in the last post. First, Joelm72 finds a hostel in Ho Chi Mihn City for $7.98 for a one-night booking. If you value Aeroplan at 1.5¢/mile, the 1,500 miles you would earn would be worth $22.50, making this an interesting value proposition. The second thing that happens is that Joelm72 highlights the phrase “Your miles will be credited to your account 2-4 weeks after hotel check-out or 2-10 weeks after car drop-off” at the bottom of his confirmation.

The addition of these words at the bottom of the confirmation suggests to me that whoever was in charge of this promotion saw the gap in the terms and added this phrase as a bandaid fix in hopes that it was enough to dissuade gamers from capitalizing on the oversight.

It wasn’t.

The Other HUGE Issue

Notice one other glaring issue with the hotel promotion? There were no limits set on it, meaning someone could theoretically find a $5 per night hostel in a low-cost country like Vietnam and book an unlimited amount of nights because people were operating under the assumption that each “booked” night would result in 1,500 Aeroplan miles.

Hindsight being 20/20, the proper phrase to be used in the promotions would have been something like “booked from Nov. 25 to Dec. 3 with stays complete by x date“.

If one were able to find a hostel for $5/night and earn 1,500 Aeroplan miles per night, you would essentially be buying an unlimited number of Aeroplan miles at 0.33¢/mile which is about 1/10th the cost that Aeroplan charges you to buy them directly.

If I were looking for Aeroplan miles and I could buy them at a 90% discount, I would jump at the chance.

The Financials

It’s unclear who is footing the bill on these bonus Aeroplan miles, but whether it be Aeroplan (Air Canada) or the hotels themselves, my guess is that when they ran the financials on this promotion, the thought was that this promotion would be a loss leader. If you aren’t familiar with the term, a loss leader is a product, service, or promotion that loses the company money in the short term but earns them money in the long term.

Think of Gillette razors as an example. The starter razor kit that comes with the handle, a battery, and a couple of blades can usually be had for pretty cheap – nobody knows for sure except Gillette, but many people postulate that they lose money on every single starter kit they sell. Where they make their money is in the replacement blades for the razor and you guessed it … each one has a proprietary connection so you can’t use an off-brand blade. They offer you a great deal in hopes that you continue on with their product in the long term.

Again I’m guessing here, but I assume that Aeroplan was losing money in the hopes that you would continue making all of your future hotel bookings through the Aeroplan portal, thus earning Aeroplan commissions for all future bookings.

The Fallout

What’s happened in the past few days has been nothing short of nuclear winter for many Aeroplan users.

In an effort to minimize the financial fallout, Aeroplan has begun to identify accounts that took advantage of this promotion and have unilaterally shut down these accounts without warning.

There has been no outbound communication on the issue. Locked out users were met with this terrifying message after they attempted to log in.

When users called, the were told by the call centre agent that their account was being investigated by Aeroplan’s Compliance Department and that they would be in contact shortly. All requests to speak to the Compliance department directly have been denied and call centre supervisors have held the line with the same response.

I have not heard anything first-hand about the Compliance Department at Aeroplan actually returning calls as of yet so many people are left in limbo.

Who’s Right?

To be honest, I’m a bit undecided on this issue. On one hand, I completely understand why Aeroplan is taking the stance it is taking. As a business, you need to protect your bottom line and the users that took advantage of this promotion are not necessarily the ones you covet in your program.

If one believes that the promotion is ultimately ruled by Aeroplan’s Hotel Booking Terms and Conditions, then by rights, no miles should be earned for stays that don’t have a check-in.

Additionally, based on those same terms and conditions, Aeroplan can shut down an account if there are any violations or abuse of the terms and conditions (ie Fraud).

Though the question remains, do these bookings constitute fraud or do they violate the Aeroplan Hotel Terms and Conditions if they aren’t even referenced in the promotion?

I also see why a consumer that took advantage of this promotion could claim they did so within the letter of the law because the promotion in no way properly referenced any terms and conditions so nothing governed the promotion other than the words in the promotion itself, which clearly references the word “booking”.

I personally did not take part in this promotion so I don’t have a dog in the fight but if I were talking to Aeroplan’s Compliance Department, I would certainly call into question the fact that the promotion was very ambiguous in its marketing and lack of terms.

Ultimately both parties are to blame here – Aeroplan for not having tight terms and conditions and the folks that made the questionable bookings for being perhaps a little greedy.

In the end, what I would hope would happen is that any miles that were earned without a checked-in stay would be forfeited but that no further punitive actions are taken against Aeroplan members that participated but didn’t check-in.

If you ask me, Aeroplan should unfreeze all suspected accounts and place all miles earned through the hotel promotion “on hold” pending investigation.

Conclusion

I’m going to admit that this was one of the most enjoyable posts I have ever written. I love looking at these issues and flexing on my knowledge both from a consumer’s perspective and from my time as an insider at WestJet.

I have seen terms missed in promotions and now realize the minutia that has to be considered when writing terms and conditions so I am certainly empathetic to those that worked this promotion.

I can almost picture a VP dumping this additional hotel promotion on top of the other 25 promotions 3-4 days before launch and not having enough time to properly vet it. Working under deadlines when you have so many things on the go is incredibly difficult.

That being said, mistakes were made in the running of this promotion and it was inevitable that some industrious and smart people in Canada would find the weakness and exploit it, after all, Aeroplan did quite a bit to promote their Black Friday Event so a lot of eyeballs saw this promo. It was only a matter of time before someone asked the question “do we really get 1,500 miles for a booking?”

Are those people in the wrong? Morally maybe, but by the letter of the law … I really don’t think so.

What ultimately happens is yet to be seen but whatever happens, it’s going to take while to sort itself out, which is a shame. I know of some folks that have been affected that use their Aeroplan miles to fund their retirement travel and they are somewhat stuck until their accounts are unfrozen even though they have legitimately earned most of the miles in their account.

If anything, this situation should serve as a cautionary tale on how manufacturing miles can be dangerous because many lose sight of the potential consequences when tempted with easy/cheap miles.