Of course this makes me wonder about how the exploited companies respond. The exploiters can be identified (are companies afraid of lawsuits and public defamation)? Is such a story like an advertisement that may make someone (a reader) slightly more likely to use Avis (in this case) in the future?
I would venture a guess that the publicity generated by something like this far outweighs the REAL cost to the company. For people who collect air miles (and especially on FT), the value of the miles is very important, but it never takes into account the wholesale price (which, from my research, is a closely guarded secret). I would assume, at some point, Avis must have to pay the airline where these points are redeemed (whether that's through a few different intermediaries or not), but you would assume that they are NOT paying the retail cost of the flights. This is why you can do things like trading loyalty points from flights for car rentals and vice versa. They are so heavily diluted by these programs, and people are (I assume) drawn in by the promise of points, it's all still a great deal for these companies, even if someone ocassionally figures out a way to beat the system. Much the way one lucky gambler doesn't exactly break the bank at a casino, but insteads give everyone else a bit of encouragement to try and beat the system themselves.
From what I've seen, airlines account for their point liability in a number of round trip tickets. I believe the average liability incurred across the industry is $64 per ticket.
About 75% of points get redeemed (since people who get a lot would tend to use them), so the total cost of a ticket if everything was redeemed might be around $64/.75 = $85 USD.
Seems like tickets range in cost, but 50k seems a fair estimate of the average flight (probably a bit high). So $0.0017 per mile incremental cost (higher opportunity cost).
This INCLUDES all the people gaming the system right now, though. And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them. Avis might be a bit more annoyed.
> And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them.
Well, they usually have corporate sales reps hammering out the particulars for big promos like this. Avis is certainly paying the airlines something, but as the size of the buy is enormous, they're going to get somewhere south of the wholesale price on the miles. Both parties therefore are eating the cost of the abusers.
If the breakdowns given by the airlines are to be believed, the bulk of the retail cost of a plane ticket these days are in taxes, fees and duties.
I booked a ~£400 return flight from the UK to the States just a few weeks ago and the airline claim to be only getting 40% of that. I'm not sure where fuel fits in.
For what it is worth, flights between the UK and the US are some of the most heavily taxed flights in the world. Sometimes you are better off with a connecting flight from a European carrier that stops somewhere like France or Ireland.
I live in Belfast so I can either use a UK airport (Belfast), or Dublin. In my previous job, we flew business class from the UK to San Fran fairly regularly. It was often £500 - £1000 cheaper to fly Dublin to SFO connecting through London than Belfast -> London -> SFO. Infact, even pricing the London to SFO on the same flight (leaving out the Belfast leg), it was £500 cheaper to start in Dublin.
The price difference was all tax - and lots of it!
The strangest thing I've come across was saving several hundred pounds by booking a return flight instead of one way, and just not using the flight back.
I started a recent flight from LHR to SFO in DUB and saved about £1000 in business class. The flight actually went DUB-LHR-SFO so you end up going back to where you started, but it worked out significantly cheaper!
It is truly shocking the quotient going to fees, taxes, and duties. Almost any flight I take between SFO and Western Europe ends up being >50% fees, taxes, duties.
It makes one wonder what marginal meetings are _not_ taking place because the 50% taxation (the fault of both port operating companies, state governments, the U.S. federal government, and their equivalents on the European side) makes it infeasible for those who are ever so slightly less fortunate.
Imagine the cost of travel -- and of interpersonal connection -- being halved because these taxes went away. Who's to say it's better to hire another Social Security Administration Vice President than it is to enable a CRISPR researcher at Stanford to meet a pharma exec in London?
(You might think that government would grind to a halt. . . but of course government only spends a paltry percentage of its winnings on things like transportation.[1])
Reading the post, I understand that, at first, the branch manager was quite unhappy about that. But then, obviously, they checked with the HQ and they received the order to be smooth with the guy because they understood that he was going to give publicity.
For every story that comes out (either written by the exploiters themselves or found out by others), I wonder how many more there are that quietly hack the system and don't tell anyone?
I don't think they were actually "exploited", because the money just came from somewhere else. From your article:
"Because the airlines sell the frequent-flyer miles to Healthy Choice for the promotion for about two cents a mile, they aren't out a thing. Healthy Choice likely also made on the deal, because the value of the publicity surrounding Phillips' pudding run probably exceeds the actual dollar cost incurred by the company for purchasing those miles."
Well, things like this did ultimately have an effect on airline frequent-flyer programs, primarily in that every program which offers status-based perks for reaching mileage totals now only considers mileage that comes from actually putting your butt on a plane (unofficially referred to as "BIS" -- for "butt-in-seat" miles, officially referred to as various terms depending on program, such as "elite-qualifying miles" with American Airlines).
And of course that also can be gamed through mileage runs, where you simply spend some time searching for cheap long-distance fares on the airline or one of its alliance partners, and use that to rack up extra qualifying miles. Which in turn has led to countermeasures from the airlines: ultra-discounted fares on partner airlines often earn only a tiny fraction of mileage flown, and two of the three US-based legacy carriers (Delta and United) now also have a minimum dollars-spent requirement in addition to the mileage-flown requirement.
Largely this is because the miles themselves, as an alternate way to purchase airline tickets, are not much of a hit, but the status perks are. Airlines do some interesting balancing acts in terms of wanting to attract people who fly a lot (and thus spend money on tickets) vs. not wanting to be so top-heavy with people entitled to free perks that you end up losing money on them.
As a rare exception, Delta will in fact let you earn bona-fide Medallion Qualifying Miles by using their fanciest credit card (no, not the Gold card, the $400/yr Delta Reserve card that also gets you into the lounges and counts as half-a-status-level for first-class upgrades)
The old US Airways card from Barclays did it too, but the reissue as AA-branded moved that perk to only the upper tier of the card, and drastically raised the spend requirement.
Used to be, $25k spend would convert 10k miles to US PQM. Now, $20k spend converts 5k miles to AA EQM, and you can do it twice a year (so max 10k conversion from $40k spend).
* Free (capacity-based) upgrades to first class on domestic flights
* Buying a full-fare economy-class (rather than discounted) ticket auto-upgrades you to first class at time of purchase
* Free checked bags
* Free access to exit rows and other extra-legroom seats
* Discount on lounge membership, and free access to lounges when you're departing internationally
* Priority customer-service access
* Waiving of lots of fees (for things like last-minute flight changes)
Moving up through the status levels, the perks have a tendency to get pretty nice; I've done multiple flights to/from Europe where I paid for an economy-class ticket and upgraded into business class for free, for example. I've also had access, regardless of fare class, to the fancy international lounges (most recently, had a shower and a hot breakfast after an overnight flight into London a couple weeks ago).
Perks are things like free first class upgrades, lounge access, no fees for checked luggage, no fee for flying standby on an earlier flight, free liquor, etc. They don't sound like much, but if you travel a lot, they are really useful.
Also slightly related: nobody pays for first class on domestic flights. Everyone up in first class is normally a frequent flyer (they tell you when you check in if you got an upgrade).
I've paid for domestic first a few times on routes where I knew the upgrade would be rough otherwise, or when I needed the bonus fare-based points to hit a status goal.
Also, on the big three carriers (America, Delta and United), upgrades get processed multiple days out depending on your level of status. Currently as Executive Platinum on AA, I can be upgraded as early as four days out from the flight. I'm actually waiting for the email right now to see if my upgrades will clear for a couple segments later this week.
United used to be my favourite airline for flying London to San Francisco, because while their economy seating were so-so, their perks as you racked up the miles were vastly better than e.g. British Airways or Virgin (far more frequent upgrades, for example, and a year of free premium economy upgrade after just a couple of roundtrips). Given that the price per seat was not very different, it was crazy how big the difference in perks was, and totally unsurprising that they've tightened up....
The Southwest "Premier" card provides 1,500 points toward status, and the lowest status level on Southwest requires 35,000 points.
The former US Airways "Premier World" card would convert 10,000 of the (non-qualifying) miles it earned into qualifying miles, once per year, when you hit a total of $25,000 spent on the card in the year. The lowest status tier required 25,000 qualifying miles.
The current American Airlines "Aviator Silver" card, which is what the US Airways card rebranded as in the merger, will convert 5,000 miles to qualifying miles when you hit $20,000 spent, and another 5,000 miles when you hit $40,000. The lowest status tier requires 25,000 qualifying miles.
The Delta "Reserve" card will convert 15,000 miles to qualifying at $30,000 spent, and another 15,000 miles at $60,000 spent. The lowest status tier requires 25,000 qualifying miles.
The only other non-flying method of earning qualifying miles that I've seen in this decade was an occasional promotion US Airways would run, offering 5,000 qualifying miles for buying or renewing a lounge membership. It was not offered last year, and probably will not be offered this year.
Note that airlines will occasionally allow you to buy your way up to the next status tier if you're within a certain range, but that typically doesn't actually deposit miles into your account: you just pay the fee, get the higher status, and that's that. Last year, American Airlines offered a flat-rate buy-up if you were within 15,000 miles or 15 segments of the next tier, for example, so at 85,000 qualifying miles you could have paid a couple thousand dollars to buy up to Executive Platinum status.
Southwest's website didn't mention it was repeatable, just said 1,500 points. So that's what I went with (I don't know Southwest's program all that well, and it's debatable whether it should really be considered "status" in the same league as the AA/Delta/United programs).
They don't typically. (Source: I have branded cards.) I'm told there are (a very few) exceptions but qualifying miles for status are almost exclusively "butt in seat" miles.
Perhaps we should use the definition of exploit that pertains simply to making full use of and to deriving benefit from a resource rather than the definition of doing something selfishly and in an unfair manner?
I was involved in a recent airline mistake situation. AirCanada accidentally listed an $8000 flight pass for $800. People are complaining that AirCanada is not honouring these passes and there's even a class action lawsuit starting up. I wonder though for those people that get heavily involved, will this mean years of getting "randomly" bumped from flights? Will AirCanada 'punish' these people?
Honest errors are allowed for - there's quite often cases of online systems giving silly prices and the company isn't obliged to honour the price. Sometimes you see E&OE [errors and omissions expected] on adverts to draw attention to the fact that they might have erred and won't honour an erroneous deal.
Sometimes companies honour the error for PR reasons, there was a John Lewis situation I think where they did this recently.
Advertised prices are "invitations to treat" rather than binding contracts of sale.
"Advertised prices are 'invitations to treat' rather than binding contracts of sale."
Ah - precisely - I'm so glad you brought that up. If only more people understood this simple principle!
You're right though, frequently honoured for good PR - it's rare that an item going through checkout at the 'wrong' price perhaps due to an expired offer is not adjusted.
In the US, at least for the last few years, the same legal principal that allowed airline to get away with correcting those mistakes was secondary to Department of Transportation Regulation CFR 399.88a
This prevented, explicitly including the case of "mistake" fares, the post-purchase increase in the price of airfare. This was done to prevent airlines from post-facto declaring a promotion a "mistake" when deemed "too successful" later.
I highly doubt it. Why would they take the risk in giving themselves a worse reputation? What would they stand to gain financially anyway? It's interesting that we seem to naturally assume that the business reaction would be congruent with what might be the reaction at the human level.
I would agree, but that's assuming everyone in the company is acting on behalf of and with the intentions of the company. I think there are plenty of examples where a company representative acts in a manner that is completely against what the company would want (see corporate Twitter accounts).
Fair enough, and in other cases I could see this as being an issue (particularly with smaller businesses perhaps where employees may identify more strongly with their company and its success), but in this case I just don't see it happening. As I said it doesn't really make sense at a company level, and on a personal level who would be the one motivated to punish these customers in such a way? It seems the onus would be on some individual(s) in the ticketing system to "Hey, that's one of those jerks from that lawsuit! I'll teach them to cause trouble with my company." That just doesn't seem likely to me.
Lawsuit for what? Hire an attorney to go after the miles and pay them and hope that he wins? Do you think a major corporation (who must handle simultaneously hundreds if not thousands of lawsuits over everything and anything) really cares? And almost certainly no class action (assuming in a country that allows class actions) how many people have this same issues? Public shaming? The opposite. Great free publicity better that it is made public and then they rectify it by giving him what he was denied in the first place. (And like you say to kids "all better now"). Do you honestly think an ordinary person will think the company should allow this type of thing and that this guy isn't obviously taking advantage of them? It's like someone taking all of the free plastic silverware at a restaurant most people recognize there is an implied limit. 37 rentals for this purpose kind of speaks for itself.
These flyertalk guys are crazy. Yes, it's awesome, but I can never imagine having the time to do this...Like the guys who fly from DFW -> NYC -> LA -> back to NYC -> SF -> back to LA -> back to NYC -> back to DFW all in a little o=ver a day and for about $360. Yeah, it's cool, but you are traveling without leaving the airport. Not my idea of fun.
Haha start of the year I flew, with 7 other people, SFO-LAX-BOS-DFW-HKG-DFW-SFO in the span of a weekend for $1000 ^_^ walked away with 60,000 mi, top-tier status at American thanks to a now-defunct promo, and 10 systemwide upgrades (each). If you enjoy the hobby, there's really nothing better.
Then, later in the year, I redeemed 75,000mi per person for a round trip in Etihad Apartments to the Maldives ^_^ Both the earn and the burn side can be a great time.
Going back to Hong Kong later in the year, paid $2200 for a round trip business class ticket on AA from DFW-HKG, upgraded to first and thanks to 3 stacked promos, earn 70,000mi and that round trip alone gets me 1/3 of the way to EXP status for next year.
From an environmental perspective, these kinds of economic incentives seem highly damaging. Not that I've got anything against you for exploiting them.
The planes are flying regardless of the people seeking frequent flyer miles. Aside from the marginal fuel increase due to the increased load, there's not much impact.
the vast majority of harmful vehicle emissions come from freight airplanes and ships with commuters coming in as a distant second, so even still the impact of consumer air travel is a rounding error (if that)
There's also the signal to the market that this flight is in demand. If you're only on the flight for points, (not the utility of the actual flight) then you're making a purchase without it actually being in demand. How this plays out - the airline seeing demand and adding another plane, or having more passengers so they can drop their rate to cover marginal costs and encourage even more passengers... I don't know. No judgement, just saying there's more to it than the jet fuel.
Plus on the redemption side, award tickets are almost exclusively "unsold inventory" -- a strict market signal that if a lot of people are redeeming and not paying, that flight should be either switched to a smaller aircraft of scrapped entirely. From that perspective, flying almost exclusively on frequent flier miles might be the most environmentally friendly way to fly ;)
How did you earn the 100k miles required for EXP in one round-trip to HKG? That can't possible earn more than 20k miles at the most… did you already have 80k miles for the year?
Ah it was the old US Airways Trial Preferred promo (where you paid $200, then had 90 days to earn 30,000 miles after which you were given US Airways Chairman's Preferred status (their top tier). The US Dividend Miles was subsumed into American AAdvantage they parlayed that into AA EXP. Long dead now, sadly.
If you are a frequent flyer, I can see the point. "Waste" a weekend and bump yourself up to the next level and get free upgrades on all your future flights for the year.
I did a business fare from ORD-MKE, to take the train back to Chicago.. just for the silver status at the end of the year. At the bare minimum status does count for things.
If you travel in coach frequently, getting upgrades on long-haul flights (especially redeyes) is really a significant quality-of-life improvement. Among other factors, upgrades are doled out by airlines based on the relative status tiers that passengers are classified in. And those classifications are relatively coarse (for United, there's a tier every 25k miles flown [1]), so if you're just a few miles short of the next tier, you find yourself doing the calculus on whether it's worth it to do a quick flight somewhere before the cutoff to get to the next tier.
There are other benefits, too. Ones that matter to me: priority boarding is great on busy routes, because it means there will definitely be room for your carry-on luggage. And on United, higher tiers get automatic access to a few more inches of legroom in economy, which is great if you're tall. And you get lounge access on international flights, which mostly means that I can take a shower upon arrival when I fly overnight to Europe.
[1] Airlines are now adding a dollar component to it, as discussed elsewhere in this thread, which roughly works out to "the cost of 25k miles' worth of regular-ish fare tickets"
All the other replies mention the obvious perks, but when I flew a lot on United, the biggest one was being treated nicely by the airline. Punch in your frequent-flier number, hit the option for a representative, and they treat you much better if you have even the lowest premium status.
I talked to someone about it, and basically the airlines all assume you booked purely on price, so have no incentive to treat you nicely, since if the next time you search, if they are $50 more than the competition you will book with the competition regardless of how you are treated. If you have FF status, then the equation is different.
Priority check-in, fast-track security, lounge access, priority boarding, priority for upgrades, increased luggage allowance and priority access to customer service. And in general, things just start flowing a little smoother when a FF status card enters the equation.
I don't think people value this enough, I have really appreciated this in the past. For example, on a MEL to LAX flight, our 787 had mechanical issues and the flight was cancelled. As the 270 passengers lined up in front of the two customer service agents, I had a mere 15 minute wait in the priority line and was able to get booked on another airline.
Not to mention, if you show up to the airport early, they'll re-book you on an earlier flight at no charge (assuming available seats).
I appreciate it. It's great to call the gold desk as soon as you hear that we're going to be delayed again but there is other planes. It also helps that I know how to look up flights and ask for specific ones before hand.
I was diamond on Delta, and now have lost it. The little perks really adds up, and make travel significantly more comfortable.
One example off the top of my head: when I had status, if I had an issue, I could call a phone number and a representative would answer after a single ring. Shortly after I lost my status, a snowstorm complicated some of my travel... I was on hold for a few hours in the general queue.
Free bags, priority boarding, lounge access on layovers, free upgrades... Each one of these things isn't a big deal, but when you're on a plane three or four times a month, it really helps you cope.
Preferred seating and boarding, free checked baggage, potential upgrades, a multiplier on miles earned. (Although the minimum status level doesn't buy you a lot on most airlines these days.)
For me it was the priority access at security. As far as upgrades I only got those about a total of 3 times while being gold on UA. (Once on silver) I did enjoy being able to get econ+ for free. I've tried to complete the Global Access app twice now. I just can't bring myself to self incriminate/volunteer all of my information just for Precheck/expedited customs.
As far as the lounge access, that wasn't given to me because I just reached as high as gold. Although it was provided when I did an international trip.
I also did it to get the gold desk when an issue arose or that there was likely to have an issue arise. (I.e. you get an email notification of a delay in flight more than 5 hours before.. better switch flights)
In a year when I was flying to the US a lot, the mile-multiplier my status gave me got me extra business upgrades equivalent to an additional $10k or so of ticket costs (alternatively I could've taken lots of free flights). They also got me free premium economy upgrades on every flight, priority boarding etc.
The mile-multipliers were nice.. however from what I found the quickest way to get miles was to use your personal card to get reimbursed for work things.
Since I was UK based and primarily flying United that wasn't an easy option for me unfortunately (I did have a British Airways AmEx. though). But regularly flying London<->San Francisco got me up the tiers very rapidly anyway.
It seems like a game more than anything else: See who can get the most value out of the system for the least investment. I'm sure that there are some valuable "hacks" that they've discovered, but I'd rather spend my time on things that are more fulfilling to me.
Some of the airlines have really clamped down on those itineraries now.
They either have an automated system which will cancel the booking (typically within 24 hrs). Or they have altered their loyalty system to give diminished returns for "pointless" stop-overs.
I do mileage runs one a year on a few different airlines and have a lot of fun plus get all my reading done! To each his own, I guess.
I'm a United Global Service (which is based on spend, not miles, ~$80K/year gets you that) from business travel that's paid for by my clients, but for other airlines (AA) if I'm on the border of making "status" I will do a mileage run if I can.
One takeaway from this article, for me, was that Avis' customer service, and the agents at these rental places specifically, were __awesome__. This is the kind of experience that would lead a customer like me to choose Avis over their competition when traveling, for example.
I've used Avis in Canada, UK, Spain and Australia - a fair sample. Not all Avis outlets are the same. For example in Spain they will happily scam you with Dynamic Currency Conversion. Don't take this one event and think Avis are angels. Try the flyertalk forum for Avis..
To be fair though, Avis don't particularly stand out - all car hire companies pull these "tricks" (some people have alleged fraudulant).
I wonder if there is any chance the Avis offices called head office to discuss what this guy was doing before he showed up. If so, I wonder if head office said "be super, super nice to him, hopefully he'll write about it..."
Can HN folks help me come up with a catchy name for something here? In particular, when somebody enriches themselves in a way that's a net negative when you look at the whole system.
Here, for example, the guy says he "earned" €3k in a way that was almost perfectly wasteful. I'm not so worried about him; crazies gonna cray, and he knows that this is ridiculous. But there are so many people who have jobs that are equally wasteful but don't know it. E.g., all those people flooding in to the US mortgage industry to help inflate the 2004-2008 housing bubble with dodgy loans.
I want a punchy word or phrase that can a) help the rest of us talk about the problem, and b) at least occasionally puncture the bubble of self-justification that lets this go on. "Quack" and "scam artist" are good examples of what I'm after, but I want one specific to this phenomenon.
I would assume AVIS worked out the 5,000 bonus miles based on average profit levels across all rentals. When they used that measurement to inform policy, they violated an implicit assumption of their metric derived model. This is quite literally Goodhart's law: "When a measure becomes a target, it ceases to be a good measure" https://en.wikipedia.org/wiki/Goodhart%27s_law
I also think you've got it entirely backwards to call OP crazy... he was not the person who built the system, but rather was exceptionally sane in responding to the incentives AVIS created (assuming he earns less than ~$2k/day). The only improvement I can see beyond simply renting more cars would be hiring someone to do the manual work of opening and closing his AVIS contracts.... well, that and selling miles for 1 euro-cent a pop.
I have a name for what you're trying to talk about: "policy-created arbitrage", and I agree this is a great example. To me the issue was not people flooding the market with cheap mortgages in 04-08, but rather that pension funds and AIGFP were so willing to buy. Why where they buying? It's too long to cover in an HN comment, but the repeating pattern is substituting ground-level intelligence for top-down rules, and creating those rules in violation of Goodhart's law.
I don't know what the terms of the Avis deal was exactly, but FF miles will generally only post to the personal named account of same person doing the activity (taking a flight, renting a car etc) -- this is to protect against the 'improvement' you suggest, but in another shape: Requiring employees to post their miles to the company account instead of to their personal account.
What would be wrong with posting air miles to the company account? It seems like an extremely logical and good thing to do to me, and I don't understand why airlines would want to discourage it.
Why would car rental companies (or airlines, or hotels, or anyone else in the travel business who noticed this particular quirk of how businesses conduct travel) want to discourage this? It doesn't help them at all to make this change, and would likely seriously hurt them.
Quacks and scam artists intentionally deceive others, generally by taking advantage of their lack of sophistication/knowledge of a particular subject matter for which they need a product.
The classic example is the "Snake Oil Salesman" who claims to sell elixirs that can cure just about any type of health issue. He is in fact selling worthless junk with no curative properties in order to make a quick buck from a medically unsophisticated crowd.
This 37rentals guy did not take advantage of an old woman with tuberculosis - he arbitraged AVIS' willingly extended offer. This is a company that knows how to run a car rental business, and it would seem that intentionally omitted rental length from the terms and conditions of the offer. What he did was not unethical, nor was it a net negative on "the whole system". He simply transferred value from AVIS to himself in a risk-free manner.
The 2007 financial crisis was fueled by a lot more than "all those people flooding in to the US mortgage industry to help inflate the 2004-2008 housing bubble with dodgy loans."
The underwriters behind the increasing number of subprime loans between 2004-2007 fit the description of Snake Oil Salesmen more accurately, with around 80% knowingly signing off on defective mortgages during 2007. [1] Mortgages, like medicine, can be complex and hard to understand for the average consumer. That is why we have the FDA & SEC to regulate these markets. The SEC failed to regulate the subprime lending market, and it failed to regulate all of the secondary and tertiary derivative markets where bundles of these toxic assets would be sold at leverage to investors who did not do their due diligence. The whole system should have been allowed to fail, and then been restructured under bankruptcy.
It's completely unfair to compare what 37rentals did to what the underwriters and investment bankers did leading up to the financial crisis, but it was fascinating thinking about why they are different...thanks for the food for thought.
The quacks I have met are often quite sincere. So I'm not interested in awareness that the behavior is bad, just that the behavior is a net systemic negative.
I agree there are differences between what this guy did and mortgage brokers. In particular, this guy is shamelessly and consciously exploiting others to his profit. Some mortgage industry people were like that, but many others really thought they were doing something good, or at least didn't think very hard. They were wrong, though.
This guy was of course a net negative on the whole system. Imagine that no money ever changed hands. What happened? A guy spent 2 days driving back and forth between two rental car companies. Other people spent time filling out pointless paperwork. Gasoline was burned. Wear and tear was put on the car. Substantial costs for no intrinsic benefit.
If the guy had just gone into the Avis branch nearest his house and stolen $3k from their office safe, everybody would have been better off. That one happens to be currently legal and the other currently not doesn't change the wastefulness of it.
Arbitrage in general is not a "net negative." It's a net positive, which is why arbitrageurs earn a profit; they are compensated for a service that generates value for someone else.
To quote from Larry Harris' textbook [1]: "Arbitrageurs ensure that prices do not vary much across markets. When prices diverge, they buy in cheaper markets and sell in more expensive markets. The effect of their trading is to connect sellers in cheaper markets to buyers in more expensive markets."
Arbitrageurs effectively "port" liquidity from one market to another. This is the value they provide to others.
Thus I'm not sure I would describe this as arbitrage; or at least it's not the term the GP is looking for.
It isn't the name of the actual mechanism for the financial gain. It's a title for the idea of doing something wasteful, perhaps even net negative for society, for a very minor personal surplus. In this example, the guy wasted gas, created traffic, occupied employees time, put wear and tear on vehicles and roads and spent two days driving in circles...all for $2000.
People are free to do what they want, and the "exploitation" is fair game, but it seems odd to me too.
My point is that he didn't earn anything. He was given something worth €3000 after performing assorted actions. But earning is about an exchange of value. He did nothing valuable for Avis; he instead wasted their time and resources.
He only earned this money to the extent that pickpockets earn what they take out of wallets, or what con artists take from their victims. Sure, they work hard, and sure, they get money from it. That's not earning, that's taking.
That's a bit harsh, comparing this to pickpockets and con artists.
Also consider that he now has 185k miles that he didn't have before. He might use those miles to take a vacation that he wouldn't otherwise have taken, which will in turn pour real money into the local economy of the place he visits.
I agree that it's an unpleasant truth, but I think it's the truth.
Imagine he went to a local car company that had just two stores. Imagine he says to the owner, "Hey, I'm going to pay you €418 to drive one of your cars back and forth between your stores for two days. You do all the paperwork as if I'm renting the car 36 times. And then you buy €3000 worth of air miles and give them to me. How about it?"
No rational business owner would do that. They only reason Avis did that is that they are so large that they can't run it sensibly; instead, like programmers, they try to construct systems of rules that approximate a sane business. This guy found a bug in the system, forcing Avis to do something that is definitely not in their best interests.
It's a smart and well-constructed scam, but it's definitely a scam. And the guy knows it. He carefully tests Avis rules. He works around Avis's safeguards. He knew not to push it too far, which is why he limited it to two days. And I'll lay good money right now that there's already some programmer at Avis who is writing code to look for reservations like this and automatically consolidate them, as well as a lawyer who's wondering how to change the T&Cs to prevent this.
As to the latter bit, that is true of any scammer. For example, think of all the good that fake Nigerian princes could do with the money they take.
So, I can sort of appreciate where you are coming from: if someone doesn't buy salt and instead keeps going to the fast food restaurant down the street grabbing handfuls of salt packets, they are being a pretty awful leech, as the reason salt packets are free and just available like that is because we trust people to not abuse the process like that. The alternative turns into what we have to do with packets of BBQ sauce, carefully limiting how many people are allowed for various food purchases, and then charging them $0.25 for extra.
I can also see an argument that this person has discovered a security exploit that they are taking advantage of, akin to someone stealing wifi from an airplane hotspot. Whether because the person figured out an SQL injection attack in the website or because they figure out they can tunnel TCP over DNS, the more ethical thing to do is probably to report the bug to the company instead of abusing it to steal resources.
This, however, is a different situation: AVIS seems to seriously be mis-pricing their core product, and in a way that is kind of sketchy to begin with. Here we have a company that is doing something I can't imagine many of us actually like: they have built a ludicrous time wasting procedure by which they abuse human psychology to encourage specific buying patterns, and they did it in a way that is well-known to be dumb. The way they have done this is by manipulating prices of products and providing an alternative currency with incentives for specific behaviors. If you want to see threads worth of people hating on this, search Hacker News for SkipLagged (the site that was sued for finding open jaw flight segments being priced incorrectly by airlines).
Let's say I go into a Walmart, and they have decided to offer a $40 off discount on jeans, but they sell a pair of one of their brands jeans for $30, and the register treats the $10 as a credit. I tell the person at the counter about this, and they tell me "yeah, it's dumb; I just work here". And then I go to the checkout with a massive pile of jeans, and the people at the register at first give me a funny look, but then a wave of realization hits them and they start laughing. And then every day I come in and they have a basket of jeans sitting at the counter waiting for me. And they just don't care. In fact, the way you should model this is "Walmart seriously believes the price of jeans to be -$10", not "we are stealing money from Walmart". Sure, we think they are daft for valuing jeans at -$10, but we even told the people there and no one cared. They helped us do this.
If you want a real world example, Sony sells Playstations at a loss. Some people would buy Playstations, install Linux on them, and then use them as nodes in Beowulf clusters, or as cheap fileservers for their house. Sony does this as an exploit against our buying behavior, making us more willing to put down the initial investment for the game console so we are more likely to buy games later. They then put a ton of DRM on their hardware, require companies who want to distribute software for their platform to pay them a royalty fee, and extract their rent from game developers.
I see why they do this, but I hate it. It means that their entire business model is built in a way that encourages them to do things like sue people who jailbreak their consoles, as their profit is now tied to their ability to get paid for people developing and distributing software. If you ever wonder why Apple is so benign against jailbreakers while Sony sues them to death, it is because Apple has a business model where they make all their money on hardware (the App Store pretty much breaks even), making them only care about what you do with your device after you pay for it due to a combination of a control fetish, a strong aversion to bad PR, and a feeling of responsibility to protect their beginner userbase.
But like, even barring these indirect effects, Sony has incorrectly priced something they have put on the market. They haven't done anything fundamentally different from someone willing to sell stock at a price higher than the market rate. When people here talk about arbitrage, it is because that is exactly what has happened: someone is pricing their product in a way that has encouraged someone to figure out how to extract value from it. Maybe you also hate high frequency traders, but it isn't quite fair to equate them to pick pockets and con artists. If we found out the people selling the stock were doing it at a loss, it makes them dumb, not the high-frequency traders evil.
So while I can't imagine spending time finding these pricing mistakes, much less making all these phone calls and doing all this traveling to take advantage of them, the idea that this guy did is something I am totally fine with: "more power to him", I say. The usual worst case scenario that could come out of this is the "that's why we can't have good things" result of "no more stupidly complex promotional programs" (a similar situation to "no more free BBQ sauce packets"), but again: that would be a good thing, so I am having a difficult time feeling like this was due to someone doing something bad for humanity.
(For my part, I run a marketplace, and I have a strict policy against illogical pricing promotions: I stare at every single discount a developer wants to have me apply to sales made via my platform, and I verify they don't have pricing paradoxes that would lead customers to have to waste their lives trying to figure out how to get the software they want at the cheapest possible price. And I really do consider doing anything else, as is all too typical in the travel industry, kind of scummy :/.)
If you are ok with "this is why we can't have nice things", fine. Me, I like a world with nice things.
Also, you seem to have a false exclusion there. Many people taken advantage of by scams are dumb, or at least making dumb mistakes. But that does not mean that the scam artists aren't morally bereft. Indeed, I think it's part of what makes them awful.
I also, like you, think that the whole manipulative airline miles system is repugnant. It's another giant waste of humanity's time; if it were banned tomorrow we'd all be better off. But that doesn't make this guy's actions better to me; all the mile-pointers are just playing into it. It reminds me of a Russian expression, "One thief sits atop another thief, using a third thief for a whip."
I don't think your first paragraph is compatible with your last paragraph: I pointed out the "this is why we can't have nice things" argument specifically to note that it doesn't apply here, as this isn't a nice thing... and you agree with me... which means you are actually defending a world with bad things, and are arguing on the side of the actual scam artists: the people behind these systems you have yourself now called "manipulative" and "repugnant". You have chosen to defend an entity that makes money by taking advantage of dumb psychological bugs in humans, a process they do deliberately and opaquely (as if people knew too much it would harm their business), against another entity who was transparent in their dealings. This makes it difficult for me to accept at face value the moral high ground you have taken in this argument you started :(.
As for your paragraph about scam artists not being defined by the people they are calling dumb, I tried to make the key difference very clear, but maybe I wasn't quite direct enough for it to be noticed: if you take the time to report the issue to the other party, if the scam artist actually says "you realize this is a scam, right? I leave from this with all of your money", and the other party still insists they want to perform the transaction and even helps you do it, I don't see how you can believe it is a scam. What makes a scam artist morally bereft is when they lie or hide their cards: AVIS was actively playing along with this scenario.
Put another way, to believe this is a scam would also require thinking almost any transaction anyone makes ever is a scam, as the entire reason people ever buy anything is because the value they assign to the good is at least slightly greater than the value the other person assigned to the good (which is good for everyone as these transactions are generally non-zero sum). I personally try my damndest to make certain that all of the merchants I use on a daily basis make money on me, as I want them to value my patronage, even going or of my way to pay extra for things that they market as "free", so I truly get where you are coming from... it just doesn't apply here, and you haven't yet connected the dots.
To make the picture even more complex, it isn't ever clear who is making money from what other players. AVIS is giving out EuroBonus miles. Maybe EuroBonus really really wants people to have miles and use them, as they get a kick back primarily from airlines for them being spent, and so they have encouraged car rental companies to give out these offers. Maybe the reason that the branch manager found out from their boss that it was OK to do this was because it actually makes money for AVIS. You just don't know here, but thankfully, AVIS clearly is informed enough to make the decision for themselves: they know these schemes have these holes, they know these schemes are designed to manipulate peoples' incentive structures, and they were even informed of this particular instance. The way this guy keeps saying "I told them what I was doing, expected them to stop me, and they cheered me on" is really telling about his ethics here.
Don't get me wrong: I agree scam artists suck, but the "false exclusion" you are trying to pin on me is clearly unfair :(. Like, if we are going to start throwing "rules of argument" stones, you still haven't defined scam in a way that is precise enough to include this person while excluding AVIS, Sony, or someone buying a house. The only definition to date is essentially "net negative to society for the transaction", but you actually have admitted that the entire pricing model of travel is "another giant waste of humanity's time". If you are going to cast such damning aspersions on to people--calling them scam artists, comparing them to pick pockets, and likening them to parasites--it would be good to at least provide some guidance as to what, specifically, they actually did wrong.
I'm not "defending" Avis here; nor am I attacking this guy. I'm critiquing a behavior.
That an exploiter is exploiting another exploiter does not seem morally better to me. I also think being tactically honest while still attempting to find the precise boundaries of how much he can scam without triggering an immune response is not notably virtuous. Many manipulative people are excellent at telling carefully measured amounts of truth.
The basis of commerce is positive-sum exchanges of value. You create something for me that I value; I give you something you value in return. This guy is intentionally engaging in a negative-sum exchange to fill his pockets. He knows it, which is why he was very careful to trick Avis's system and limit the amount he extracted to a level where Avis was unlikely to bother to stop him. I am perfectly comfortable calling that a scam, and it is definitely parasitic, in that it consumes resources without creating value.
(wow, I've never experienced "that comment was too long" from Hacker News before... :/)
(part 2/2 <- make certain to read part 1/2 first)
> He knows it, which is why he was very careful to trick Avis's system and limit the amount he extracted to a level where Avis was unlikely to bother to stop him. Many manipulative people are excellent at telling carefully measured amounts of truth.
This would be a great argument, and again, is one I would entirely agree with... but the only evidence I see of this is "I figured two days would be enough, or the reps might become fed up with me", which is not because he is concerned he is extracting too much value from AVIS but instead seems to be due to not wanting to make the on-the-ground employees unhappy that they are having to do a bunch of repetitive labor. I make the same tradeoffs when I order things at restaurants that I feel quite confident the restaurant will make money and where they would want me to get what I want, because I feel for the people at the bottom who are being paid some fixed wage. He mentions the workload again later, seemingly because he actually cares.
I think you need to be very careful in this situation (as in all situations) to not try to generalize it to other situations you have dealt with and turn it into "just another instance": once we lose the specific situation, it becomes tempting for us to think we see evidence or facts that help us fit a specific situation into an overall narrative we have seen in the world--I will happily admit that I have made this mistake at many times--but it is important to always look back at the specifics of the situation we have chosen to discuss.
To recap, what seems to have happened here is you have two reasons for why we should be unhappy with this person. The first, is that we should simply dislike anyone participating in a transaction that is "a net negative for the society as a whole" (which is an exact quote of yours, and is similar to the "the idea of doing something wasteful, perhaps even net negative for society, for a very minor personal surplus" definition given by forgetsusername that you said "has [you] exactly right" in the comment I first replied to, and seems exactly to be what you mean given your usage of the phrase "the whole system" when you first posted). This metric is nice, because it is sounds like it would be reasonably objective and measurable, but it is very difficult to correctly evaluate:
- it requires an analysis of numerous third-party actors who are involved in the extended transaction (as it could be that AVIS and this person are accidentally colluding against EuroBonus, as in the realistic contract scenario I previously discussed),
- it leaves factors outside the control of the actor whose morals are in question to sway the balance (as maybe for this one time doing this it is a big win for AVIS's marketing department, making our moral judgements incapable of being repeated),
- it causes confusion with regards to who actually is causing the problem (as with the housing crisis or with network neutrality: we suddenly have to blame people who are obtaining short-term benefits by, for example, buying houses with inflated credit),
- it puts us into the horrible situation of realizing that most of us might constantly be immoral (as we spend money on useless junk that fails to make us any happier and ends up in a trash bin somewhere, instead of feeding someone else),
- it absolutely requires us to take into account the morality of all actors and how their decisions affect future outcomes (so we have to judge if AVIS's program should exist in the first place to see if undermining it is a "net negative to society").
As this argument path becomes more complex, rather than attempting to delve into any of the intricacies (which I personally find quite interesting! hence again, why I spend so much time talking to people about the careful interplay between "unlimited" bandwidth and network neutrality, and why I have carefully laid out so many fun examples), you have instead ended up moving to a new definition: that none of this actually matters, as we should be judging how the person we are accusing of exploitation treats the exploited. This metric is also nice in a different way, as it is conveniently local, but it then requires us to actually lay down what the person is doing that we don't like and "stick to it". The thing we classically don't like about "scam artists", "pickpockets", and "parasites" is that they do things to other people without informed consent.
This new definition has nothing at all to do with negative sum transactions and should not be modeled at the level of society. We often judge pickpockets even when they take something from someone who has enough money that their marginal utility of their possessions is much lower, and you have expressly rejected (which I don't disagree with) the notion that someone isn't a scam artist just because they scam someone we dislike (which I will again point out is an analysis we are absolutely required to do if we insist on a definition of morality that looks at the impact of transactions on the state of "society" or "the whole system").
Now, it isn't clear to me that this person actually acted in this way. It seems to me more likely that AVIS as a system is simply OK with this happening, at least today (due to PR), if not often... as in all seriousness, I have no clue where EuroBonus miles come from: there seems to be a treaty signed by the actual countries involved that defines some of how it works; one can trivially imagine situations like the one I described earlier: hell, the entire banner ad industry is set up like this, leading to the "collusion" problem of people who run popular web properties often encouraging and colluding with people who perform casual click fraud :/. Again: this entire space is fascinating, and it is really difficult to throw stones at people as flippantly as you have seemed to here.
But yeah: I feel like you either now need to actually take some deep dives into the complexity of your original position (and be prepared to judge AVIS, EuroBonus, and your own buying behavior as we attempt to analyze "the whole system" and apply that brutally objective metric to everyone, including those people you have attempted to protect in the past), or be willing to entirely discard it for the new definition which is both less controversial of a morale to possess (and so many people who are in this conversation, including myself, would likely not have bothered responding), but no less contentious as to whether it actually is safe to apply in this particular situation (and I truly feel like the case from the provided material is just not there).
(wow, I've never experienced "that comment was too long" from Hacker News before... :/)
(part 1/2)
> I'm not "defending" Avis here; nor am I attacking this guy. I'm critiquing a behavior.
You actually are "attacking this guy", because you are "critiquing a behavior" he has performed and using it to justify calling him a "scam artist", a "pickpocket", and a "parasite". I am not certain how else to describe what you are doing. That isn't to say that attacking someone is bad... far from it... only that you should do it with care, and preferably not attempt to hide or sugar coat the action :(.
> That an exploiter is exploiting another exploiter does not seem morally better to me.
So, I agree with this. I primarily had to bring this up, as it completely decimates the "this is why we can't have nice things" argument that tends to come up in these situations. (Which makes it was all the more strange that you were trying to use that argument after we showed that this isn't a nice thing; it is like, by arguing against it, I reminded you of its existence, but you had totally ignored the part where I had made the argument not function by undermining "nice thing".)
Really, my argument has not been "this person deserves what they got", it is that we are attempting to define what this guy did that makes you feel he is worthy of the labels you have given him, and it turns out that we have two potential definitions so far from you, and one of them actually doesn't work without taking a step back and putting it in the greater context. I will again address that one first, as it is related to this paragraph.
> The basis of commerce is positive-sum exchanges of value. You create something for me that I value; I give you something you value in return. You create something for me that I value; I give you something you value in return. This guy is intentionally engaging in a negative-sum exchange to fill his pockets.
Yes: I understand how this works. In fact, I brought up the non-zero sum analysis of transactions in our back and forth. I also, in bringing it up, demonstrated how complex it is for you to attempt to model the scenario in this limited way by trying to "pull back the curtain" on how business arrangements with companies like AVIS and EuroBonus might operate. However, we can build a model of this situation that is even more simple than that: this entire thing is actually an interesting marketing stunt. Most of the things people do on websites like flyertalk is pretty obviously to everyone not negative-sum any more than people in retirement homes clipping coupons is bad for business.
When companies look like they have "retracted" promotions they have provided, they tend to look really bad to this actually-profitable-to-them community. (I point out "to them", as often these transactions end up hurting companies with travel expense accounts, which is yet another way in which this is all fascinatingly complex.) We therefore actually can make a reasonable argument that this specific transaction is actually positive sum to AVIS, because it shows "wow, AVIS is friendly, we should spend more time staring at AVIS". Which is again why trying to just claim "it is bad when the transaction is negative sum" is such a difficult argument to make: I've already pointed out how it requires a God's-eye view of the accounting, I've already pointed out how it essentially paints this entire industry
While I am concerned that my careful attention to concrete scenarios has been a waste of time so far in this conversation, I will give you another one: personally, I think everyone who covets "unlimited Internet" plans are doing something absolutely horrible for society: I think they are undermining innovation and free speech by encouraging scenarios where network neutrality is almost required to make the accounting work out correctly. I make that argument (on talks that I give at conferences and in panels at conventions), because I think we should have long-term views of the future, and we should decide which agents to blame in situations that are leading us down the wrong paths. In this case, I actually think consumers are more to blame than AT&T.
That said, I don't actually judge these people as bad people, because that is a really complex argument (one I'm not even laying out here, though if you really cared, I was on a panel as part of the EFF Track at DragonCon 2014 talking about this, an event that has an audio recording floating around the EFF website). There is a much simpler argument, of course, but I think the simpler argument actually falls to the same problem that it just requires people to care too much about someone else's business model: "you quite obviously can't get unlimited anything for a limited number of dollars". While maybe it would be fun to do so, we can't call people who complain that the unlimited plan they bought from AT&T was first rate limited and then terminated any of "scam artist", "pickpocket", or "parasite".
The argument, of course, is one that you have yourself made in the past, as in when you said "There's a clear information asymmetry here, and therefore a clear power differential. But so many people are instantly willing to blame the weaker party for being trusting, rather than blaming the stronger party for abusing their customers." when Joyent ended their lifetime hosting accounts, and people were here on Hacker News defending their decision. For this and the other reasons I have so far argued, we thereby really need to reject the simple "negative sum" argument for why we should denigrate this particular actor. Instead, we have to turn to the other argument you have made as the real reason why he could deserve our scorn.
He also had fun, or at least his writeup sounded like he enjoyed his adventure.
Right now I'm remodeling my home. It's laborious, costly, consumes resources that could be spent on building housing for those less fortunate, occupies the time of employees at the home stores I frequent when I ask questions, but I enjoy it. One has a hard time calling it "exploitation", but aren't I exploiting resources that are available to me for personal gain (albeit in a very literal definition)?
What you do with the resources you control is an interesting question. But the one I'm pointing at here is how you get those resources.
If you read about scam artists from the late 1800s and early 1900s, there was a lot of innovation where people filled their pockets in ways that were perfectly legal but negative sum for the society as a whole. (Joseph "Yellow Kid" Weil's biography is a fun read.) This led to a whole new series of laws, including those relating to wire fraud.
How those innovative scammers spent their ill-gotten gains is a separate question from asking whether the way they filled their pockets was right.
Not sure why people are downvoting this comment, even if they disagree with your assessment of the FT poster's behavior, since you were pointing out what the OP was looking for.
I just refer to it as the perilous incentive structure of late capitalism.
Depending on how this works on Avis' end, this may or may not qualify, but rent seeking is definitely a thing. The wikipedia article has good examples of pervasive examples of rent seeking.
Thanks, but that's not quite what I'm after. Both because externalities are positive and negative, and here I'm talking about negatives. And because participants in scams generally choose to participate, so it's not really an externality.
Not to threadjack, but: people are mentioning "priority access at security" as a perk of higher FF status. Which begs the question: what does FF status have to do with security? You could get a higher status by just renting a car (or cars, as per the story). Does that make you a less of a security threat at the airport? Shouldn't security be independent of your status in some points collecting game??
A lot of people do this; you're conflating 'status' and 'earning points' -- none of the miles earned here count towards elite status. You can't get elite status from 'just renting cars'. You generally (with a few exceptions) need to fly 25, 50, 75 or 100K BIS ("butt-in-seat") miles each year.
Security takes time at airports and airlines want to look after their best customers, so they have arrangements with TSA/airport officials to create a shorter line for passengers with status and passengers in premium cabins. Doesn't affect what happens when you get to the end of it.
This is totally accurate. I just want to add, that the TSA now has "TSA Pre" (or Pre-Check) which categorically DOES impact the level of screening pax need (i.e. they need less screening with TSA Pre). Express doesn't (you just skip the queue), TSA Pre does.
This is free to members of Global Entry, SENTRI or NEXUS programs, active duty [US] military, DoD employees and other federal employees with security clearance. For everyone else it costs $85/5 years ($17/year~) and may require an in-person interview.
I'd argue that if you are a frequent traveller, this is BETTER than status at the moment. The TSA Pre line is shorter and moves quicker than even the express line. And if you travel even semi-regularly $85/5 years is almost nothing compared to the time and hassle savings (look at it as one trip's lost lounge access).
I'd argue the extra $15 for Global Entry is worth it, if you're considering signing up for a Trusted Traveler program. You can go from landing in the US to curbside in single-digit minutes, and even if you don't often fly internationally, skipping one gigantic miss-your-connection-long line is worth it.
If you live nearby (or can easily get to) a Canadian border point, NEXUS is an even better value. $50 for five years, includes Global Entry privileges, and you get expedited access in and out of Canada - dedicated lanes if you drive, Global Entry-style kiosks if you fly. It can take a month or two for your interview however as both governments have to approve you.
I do have mixed feelings about forking over money to a system I would much rather see replaced or overhauled. However, considering how often I've flown in the last couple years, my NEXUS membership has absolutely been worth it for Pre-√ alone, and the times I've used NEXUS/GE have been equally handy.
The miles in this trick aren't status miles, so they won't affect your ability to use fast track.
But, that said, fast track security is the exact same security as regular security, it just have more staff allocated (at the airline's expense), so the lines will (usually) be shorter. Also, fast track will have a high percentage of experienced travellers that know to pack their liquids in a plastic bag, to remove their laptops and shoes, and when etc, and especially know the total futility of engaging with the security staff at all, so things tend to flow faster.
When TSA rolled out the precheck program (which is, basically, pre-9/11 screening where you leave everything in your bag, leave shoes on, and go through a metal detector in a usually-short line), they began by inviting people from the upper tiers of frequent-flyer programs into it. I don't exactly know the thinking there, but I'd guess it's that someone who flies that much is unlikely to be a risk due to having gone through their standard screening so many times.
These days, though, they've gotten rid of that and now if you want precheck you have to enroll in it or get it from another trusted-traveler program (Global Entry, in my case).
Some airlines have had a separate lane set up to funnel their status-holders to the front of the normal security lines, too, though that seems hit-or-miss in these days when most of the frequent flyers have precheck in some form or another.
All that means is you get to queue-jump when you get to security rather than wait in the longer general queue. The actual security screening is the same.
My point is: why? Why does the TSA (a Federal agency) offer differing services based on your value to the airlines? In my humble mind, these two are orthogonal. Of course, if you have one of those Trusted Traveler statuses, it is different, as the TSA has screened you. But your airline status has absolutely nothing to do with the TSA!
I view this as simple arbitrage. There's an opportunity to take and you take it first.... Lots of other comments somehow point to the fact that this is parasitic behaviour. Well, this is human behaviour.
The story in a nutshell: "On July 22, 2011, the U.S. Mint said it was ending credit and debit card sales of $1 coins because of "individuals purchasing $1 coins with credit cards, accumulating frequent flier miles, and then returning coins to local banks ... While not illegal, this activity was a clear abuse and misuse of the program."
I can't understand calling this "parasitic." Doesn't that imply that what's going on is somehow against the will of whatever you're exploiting?
If a company sets up a promotion, it's their responsibility to ensure that the terms are favorable to them. If they screw it up then they should have thought it through some more.
Loss leaders are a time-honored way to attract customers, but anyone who uses them must be aware that sometimes the "loss" in "loss leader" is all you get. You either need to make your terms accordingly, or bet on the average being beneficial even if you lose out on some individuals.
The Mint has to pay credit card processing fees for these sales. That's one thing as a cost of business to one of their stated aims, putting currency in circulation, but another altogether if it's just a round trip for no net gain.
> If a company sets up a promotion, it's their responsibility to ensure that the terms are favorable to them.
If an animal sets develops a new organ, it is its responsibility to ensure that the functionality of the organ is favourable to them. If it screws it up and a worm infects that organ, then it should keep evolving a bit more.
Of course this is a somewhat trivially true statement, but it doesn’t change the fact that the worm is parasitic.
Also, it's not really showing their point well - the reason we're here is because our various historic genetic cousins and such died off because they weren't able to adapt, and we were lucky enough to.
When you are trying these kind of system exploits, it really helps to not have to deal with any humans. It would be very easy for this plan to be shut down by someone in the office just refusing to rent to you after the first car, because they see you are trying to game the system.
In practice, I suspect the reps earn commissions on rentals, incur no penalties at all for the frequent flyer bonus, and were quite happy once they'd satisfied themselves that the payments would be made and the cars were only going to be driven by the renter and would be returned in one piece.
The risk of some auditing process, computerised or otherwise, highlighting the error and not actually crediting the miles is still pretty high though...
That is what I found great about this story. He calls 'em up and is frank about what he's doing.
One quote says it all, "25 years at Avis and I've never seen anything like this"
Not only did they know, but they thought it was cool and helped the guy max out his opportunity. The object lesson here is to never underestimate the impact of boredom or just the chance to be part of something unique as motivators.
Bet those people had an interesting day, and you know they all got to talk some about where they live, where he lives, etc...
Heck, I would jump on something like that just for the conversations that day, if nothing else. As long as the guy is nice, why not?
Yes and no. In this case, it seems like it helped that he dealt with humans (who gave him 1 car do go back-and-forth with instead of insisting he hand it and get another one, who organized the paperwork, ...), but it could have equally gone in the other direction.
So because this involves high status goods - flights, car rentals, etc - it's a cool hack; but when an old woman exploits the couponing rules at Market Basket and gets a cart full of canned goods for 25c, I can't help feeling that's not going to make the front page of HN...
And some of the people on that show who really exploit the coupons seem to be ex-white-collar alpha-types turned stay-at-home parents who would be the same people who do these mileage hacks back when they were travelling for work.
Flights are probably a major expense and inconvenience for lots of people here, while grocery spending isn't. People are naturally interested in things related to their situation, it isn't necessarily anything nefarious.
For instance, in the game Battlefield 4, using the mortar, considered on pure game mechanic merits, is worse than the crappiest of Atari games. Yet it is still compelling within the larger battle, especially if you are using it with some goal in mind like taking out recalcitrant snipers.
Reading an article on extreme couponing or hyper miling might be likewise dull unless it relates in a personal way to a challenge you have faced or goal you have had, even if you would never actually go to the lengths described to alleviate it.
The problem with these 'who can consume the most' competitions to game the system is that there are 'external costs' placed on everyone else. Planes are noisy, they pollute and they crash.
In West London the annoyance begins at 4.30 a.m. and goes on until 11 at night, with another plane load of really important people arriving every two minutes. If we didn't have people going about on senseless travel all the time then the airport could be closed for long enough for people in West London to get some uninterrupted sleep. I don't think people gobbling up air miles care about these 'externalities'. I know they can't see past their own greed, but, what about noise, climate change and the fact that we do not have more than one planet's worth of hydrocarbons to waste?
Also, fun that it may have been in Madeira, Madeira used to be unspoilt. The place deserves better than some idiot hiring cars and driving them in circles all day. Again, noise, pollution and wastage. Despite the photos, I don't believe this is 'take only photos, leave only footprints', driving around madly for one day is not doing justice to what Madeira has to offer. It is quite an insulting attitude, typical for an American where community was swapped for this inane frequent flyer culture where nobody knows their neighbour or cares about things like the planet.
I do not actually fly any more, mainly because I have better things to do with my time (not because I think that I can save the planet by using my bicycle instead). In the work context I get more done from the one desk than those around me that have to do lots of flying for 'work'. I am also quite bemused at those that do travel for leisure - these days they come back and have nothing to say on their first day back, it is not like they are infused with mega-enthusiasm from the amazing things they saw and people they made acquaintance with. Did I not get the memo that you must not talk about your holiday?!?
Also odd with the mass-flying-disease is that the fuel in those planes is not taxed. Would these air miles schemes work if things were taxed properly? People that fly don't tend to care about that. You would think they would think about that whilst being waited on by effective slaves in parts of the world where human labour is not considered a valuable resource to be rewarded accordingly.
I think that's overreacting. As pointed out, the earned miles are not that many (a couple of Europe-US roundtrips), and the 37 trips of 1.2km to get the promotion weren't exactly that many either.
As for the "insulting attitude", who exactly is feeling insulted? Nobody from Madeira I know (I'm Portuguese myself, so I know a few) would feel "insulted".
Curiously, the people I know who travel more by plane are those from Madeira (and Açores), since they don't have access to a lot of stuff in the islands. In reality, their lifestyle is much more polluting than someone who pulls a stunt like this every few years.
I look back on air travel of former times with incredulity - being able to smoke on a plane is one excerpt that particularly takes the biscuit. Concorde was quite incredible too, but the world has moved on to this new madness of easy-hack TSA locks, bullshit terror stories and lame air miles schemes. (As it happens I am looking after a house right now because the occupants have gone on a cheap flight made possible through some frequent flyer scheme.)
People also used to go mad for Green Shield stamps from garages, racking up far more miles on the road as a 'sales rep' than needed because there was this marginal incentive of rubbish you could get with the Green Shield stamps. It all worked wonderfully for a while and many people were delighted getting things like 50 glass tumblers for their kitchen cupboards.
I am sure the people next to the Avis depots around the world are used to people revving up their engines, slamming doors and shouting, but that does not make it right. If you had something important to do, how would you feel if there was someone parking a car every few minutes outside your place to drive off again a few minutes later, repeating ad-nauseum? I personally would not feel happy doing that sort of 'driving' even if I was in some faceless bit of American surburbia where such activity was normal. I might not have cared when I was a teenager but I didn't think very well in those days.
I also have connections with Madeira and I have seen the old photos from how things used to be before the E.U. plonked some massive airport and motorway there. It is a small island with a big runway, no surprise people on the island use it instead of hitching a ride on a fishing boat. I have not stood outside the departures lounge to count natives vs tourists but I am sure that whole infrastructure was built for tourism, not so grandma in Funchal can visit her relatives spread out all over the globe.
Is it wasteful? Yes. Do I find it kind of dumb? Sure. But is it terrible? Unless he was constantly doing it, not really.
Frankly, I doubt the problem here is really the pollution, but the fact that he's spending that in something not considered "proper." Some guy might waste much more taking a long vacation in some remote place, but the fact that this person was doing something you and I consider dumb, makes him not deserve to do so.
But I personally don't consider a person who produces 1T of CO2/year to "travel properly" or "really know" the place they're visiting any more deserving that someone who wastes the same amount to drive between Avis stands. Unless he's actually wasting more than average - and we have no reason to think that - who am I to tell him how to enjoy his life?
What indication do you have that 37rentals is an American? Is it necessary that he be American for your bias to work correctly?
Your seem to revel in false nostalgia and projecting on folks who choose to travel for leisure. When I travel, I see and experience so much that it is difficult to distill into a 2 minute soundbite for some coworker I do not know particularly well just to make smalltalk. That does not mean that I didn't have a fantastic experience, and I certainly don't wish for you to take it as a data point that things were better in the good old days.
It seems choosing a home in the flight path of a major international air hub was not the best move for someone with such critical views of humanity.
That's not to say I disagree with you; I, too, have negative feelings about these kinds of wasteful competitions. But I think you're going way overboard.
Just waiting for one of these companies to create a "Hack the Promotion" promotion. Customer who devises the most efficient hack wins (maybe double/triple miles?).
He's really undervaluing his time and energy. Maybe this is a fun and exciting game for him, but I'd think someone as clever and determined could do something more productive.
And that's just /earning/ the miles, never mind using them. I have 1.4 million miles because even the act of using them consumes a lot of clock time and usually turns out a waste of energy (tickets based on mileage are rarely available for the routes/dates I want to fly).
I don't buy that. How we value things really does vary from person to person.
His time and money commit was not large, yet he got a nice perk, at least one or two awesome flights somewhere he would want to go, status, and a chance to hang with the locals where he did the rentals.
Bonus, a nice day just driving around a part of the world just for the hell of it.
To me personally, that and the chance to interact with some people there is worth a lot. And this guy didn't pay all that much.
I think he forgot an important criteria about where to rent the cars, but, by pure luck, got it right. He must have considered the "niceness" of the people of the country he is travelling. Great that he got to Madeira, a very laid back country with great people. Try to do it in ... ! (fill the blanks with your preferred sullen people)
> ... a one time cost of a little over $3000 (or a little over $2200 if you subtract the tax deduction) ...
How do people still not understand the difference between a tax deduction and a tax credit? Deductions reduce your income, not your tax burden. Even at the highest 31% bracket for 1999, that deduction is only worth $248.
My reading is that he was able to donate nearly all of the $3,000 worth of pudding, which means if his marginal tax rate had been about 27% that year, he'd get about a $810 reduction in his taxes.
That's not what the text reads, but I suppose it's possible.
> But here’s the beautiful part, doing this counted as a considerable charitable donation, which let David claim just over $800 back in tax deductions at the end of they year.
Well oftentimes you can invest (at least some years ago you could) in a nice stay in a local hotel. Nothing says I love you like a surprise trip to a nice hotel on 14. Feb.
And if you do it like him, you can have a nice (gamified) trip to Funchal as well. By the way a really great place to visit...
I'm sitting on a cache of American Airlines miles equivalent to a business-class round-trip to Sydney on Qantas, in anticipation of visiting Australia sometime in the next couple years.
For a flight that's over 15 hours, you better believe it's worth it.
That's why the Avis employees assigned him 1 car at each site. He re-rented that same car all the time. The employees mitigated the expected DOS with a cached response. Both DOS'er and DOS'ee are happy.
Edit: Poor reading skills on my part... I just noticed you said 'group'.
Big promotions are often an opportunity to DOS yourself. Sometimes, the fact that a system is likely to be overloaded and sell out is part of the appeal - think about hitting refresh to get tickets as soon as they go on sale, or waiting in line from 6am to get into a midnight doorbuster sale.
Self-limiting how many people can exploit the deal through capacity is also a way of preventing unlimited downside losses on the part of the promoter. That's why most special offers say "subject to availability".
That would be an enormous profit for the car rental places, especially if they get little traffic most of the time. I don't think buying huge amounts of something at max price counts as an attack.
This is a good point that may elucidate how such things are tested: someone conjures up the 'contract' / terms and conditions, then what? Is there a suite of 'unit tests' for the conditions, then a QA department? I imagine there is (or was) an economic analysis of this that leads to the decision to apply human resources elsewhere within the company. The 'loss' from a few exploiters must be probabilistically low and does yield publicity / free advertising (right?).
And the tricky bit for something like this is that the terms and conditions have to match the programming, otherwise someone might exploit the programming, even though you wrote bulletproof t&c.
The general way out for the airlines is that the terms give them the right to unilaterally change the terms at any time, or terminate membership in a program at any time.
That's a pretty strong claim. I condemn a lot of economic behaviors that prey on people who just aren't as good at reading legalese or terms and conditions. Banks reordering deposits and then charging overdraft fees that are far above their actual costs is one example, or contracts with hard to understand add-ons are another.
I don't think this behavior is at all like those shenanigans though. Companies that offer frequent flyer miles spend plenty of time trying to offer the maximum apparent benefit while limiting the ways they actually pay out. It's a game where they're often trying to screw you. Screwing them in return (without violating the law or even their own terms) seems fine.
If they had a simple system with decent (or even bad but predictable) rewards, like x miles per dollar spent, none of this would even be an issue. But they see an angle from a more complicated system. Sometimes it works for them, sometimes they pay more than they expected.
Sounds simple? Well it isn't, and it has already been tried. The exploiters will spend a lot of money - on buying money. They will buy gift cards and other such things which can easily be converted back to cash.
These kinds of marketing exploits happen everywhere. I remember a nice local event where a mobile carrier offered pre-paid SIM cards at a great discount. People hoarded all these discounted SIMs immediately. Used them to transfer money to some web services (some services offer pay-by-mobile, where the charge is added to your mobile bill). Then proceeded to withdraw the money to their bank accounts. A pretty nifty way to make money.
> But IMHO it's another thing to behave like a parasite.
Is the name calling/vilifying really helpful?
Also companies remind us all the time that they're amoral, but when people treat companies in an amoral fashion suddenly everyone gets upset about it.
The ironic thing is that Avis as a company has TONS of complaints. Just google "Avis is a scam" and read all the stories about hidden charges, misleading headline figures, and so on. Pages and pages of them... Because they're amoral and only care about the bottom line.
Why is it wrong for people to only care about the bottom line?
That isn't "name calling". It's just naming. What he did is very precisely parasitical.
If it's wrong for Avis to be an amoral, predatory agent that focuses only on what they get without regard to the costs, then it is equally bad for this person to do the same. In one way it's worse: he knows he's being exploitative, where a lot of large-organization negative externality is due to clueless systems, not conscious individual choice.
Approving of it because you don't like Avis and identify with this guy makes the problem worse. Because now you've helped normalize exploitation as a behavior, and people inside Avis will feel just as justified in their bad behavior because they can see themselves as responding to "those awful scamming customers".
I see, fair enough. It was clearly wrong to assume you viewed his actions as either moral or immoral.
> Avis [is] an amoral, predatory agent
> Approving of it [...] makes the problem worse.
> you've helped normalize exploitation as a behavior
On second thought, I'm pretty sure "name calling" was spot-on.
OP bought a good for the lowest price he could find. If you want to call that exploitation, more power to you, but please don't try to pass off your moral opinions as objective truths. It's slimy.
I think you meant to say "That it is parasitic is factual if I make a bunch of assumptions about AVIS' profit margin and intent, as well as OP's past and future business dealings with AVIS. That hypothetical parasitism is immoral is my opinion."
As you get more practice making distinctions between what's true and what's opinion, I think you'll find it easier to interact with different viewpoints from your own :)
Continuing to be an anonymous, smug, superior dick is not improved by putting smiley-faces at the end of it. If you're actually trying to be helpful, then start with enough respect that you consider that I might have already considered carefully the boundaries of opinion and fact.
In your 12 comments on this thread, you called OP or likened him to a parasite, immoral, exploitative, wasteful, crazy, a pickpocket, a medical quack, net negative to our society, a con artist, a scam artist, a Nigerian scammer, "why we can't have nice things", morally bereft, manipulative, a time waster, a waster of resources, and selfish.
I responded to this by asserting that you were making those claims by making large assumptions about AVIS, OP's mental state / situation, and OP's past and future dealings with AVIS.
I simply don't see how you can know the things your claiming to know without access to that information. For example, you'd need to have an answer to: did AVIS make a profit on all this?https://news.ycombinator.com/item?id=10215662 would seem to imply AVIS did make a profit, and OP is overvaluing airline miles in an economic sense. https://news.ycombinator.com/item?id=10221662 calls it into question from a different perspective.
If I was wrong in assuming you don't have that information, please correct me and post it! I will happily read through it and perhaps join you in judging OP. If you don't have the information, but feel there that the information is not necessary, please describe how and I'll read it and respond. If neither of these is true, please consider adding caveats to your statements in future. It will help others understand you, and make debates more fruitful (#include the replies to your other comments on this thread)
I don't normally engage with people making schoolyard-type statements, but did so in this case because it felt like my civic duty -- it matters to me that HackerNews remain a place for intelligent discussions. As you are probably aware, my intent with the ":)"s were not to be mean but rather to let you know I didn't have a problem with you as a person, only with your specific behavior. It's hard to call out behavior civilly, but I tried (and think I succeeded) in this case. That you then proceeded to call me snotty, smug, and a superior dick is only serving to prove my point: you're assuming, and mistaking those assumptions for reality.
I agree you don't see it, but I don't think that merits your insulting assumptions and language about me and what I know.
To see this guy as acting parasitically, all you need do is take him at his word. He has a calculated economic value for the miles that is far larger than what he paid for them. He himself believes that Avis values them and would see him as a scammer, which is why he carefully limited the size of his grift and energetically persuaded employees to do things that they realized made no sense. I don't see anything wrong with assuming that he's right.
To double-check, though, there are plenty of reasonable estimates on what air miles actually cost out on the web, and the guy's estimate of the economic value is in line with those. And Avis's promotion looks like a pretty typical customer acquisition thing where you pay some sort of initial acquisition cost and hope to make your money back over time. They did not acquire 37 customers here, or even 1, so the guy is entirely reasonable in thinking that Avis would stop him if he did this at scale.
So the balance of the evidence is that 37rentals is, as he himself thinks, scamming Avis out of a lot of miles. Is this CERN-level proof? No, but I don't think it's necessary here. We're on a forum, discussing another forum post. My assumptions are reasonable and are based on my many years in business. If you have evidence for other assumptions you'd like to make, godspeed. But for a guy wrongly in a lather about supposed no-evidence assertions, you are making a lot of no-evidence assertions yourself. Anonymously, of course.
When I saw you'd replied here, I excitedly checked https://news.ycombinator.com/item?id=10218108 to see if you'd also given saurik a reply. Alas, no. You choose to reply here stating you believe OP agrees with your assumptions, while ignoring more detailed replies to your position.
For my part, I think that if OP agreed with you he wouldn't have done it. This whole thing reminds me of a discussion I once had about doctors who perform abortions... Some people find it very hard to understand the other side doesn't agree that life begins at conception, and wrongly conclude abortion doctors must believe they're committing murder.
It's always easier to brush other positions off as too verbose, or too anonymous, or too whatever. It's much harder (but much more valuable) to consider the problem and data at length, and come to a new truth. This is what differentiates science from the tinkering which proceeded it.
> Is this CERN-level proof? No, but I don't think it's necessary here. We're on a forum, discussing another forum post.
This is what I was talking about when I said "it matters to me that HackerNews remain a place for intelligent discussion" above -- to me HN isn't just some online forum; the standards we should hold ourselves to are much higher. We're here to learn and relate. If you'd acted this way on reddit I wouldn't have taken issue... but on HN it pains me to see this kind of behavior. The other side of your holy war is not inherently immoral.
When applied to a specific individual, it is name calling. As in this case.
> What he did is very precisely parasitical.
Nope:
> par·a·site; an organism that lives in or on another organism (its host) and benefits by deriving nutrients at the host's expense.
Nothing precise about it. More like a slang insult for behaviour you disapprove of.
> If it's wrong for Avis to be an amoral, predatory agent that focuses only on what they get without regard to the costs, then it is equally bad for this person to do the same.
But when companies do it everyone ignores it, or screams "buyer beware." When an individual does it people start name calling, villifying, or using moralist arguments. It is a double standard. When Avis does it it is Avis' customer's fault, when a customer does it to Avis, it is still the customer's fault.
> In one way it's worse: he knows he's being exploitative, where a lot of large-organization negative externality is due to clueless systems, not conscious individual choice.
You're now literally playing the "Avis is amoral so it is ok" card. Why is it inherently wrong for individuals to act amoral towards an entity which also acts amoral?
> Approving of it because you don't like Avis and identify with this guy makes the problem worse.
For the record, I approve of it because Avis would do exactly the same thing in his place, and does to their customers all of the time. I think Avis should be treated the way they treat others. It isn't because I dislike Avis, it is because I like to see equal treatment, and if Avis is treating people badly then they too deserve to be treated just as well (or not).
If companies are flexible or show loyalty, I genuinely believe customers return that in kind. Look at Costco. This is not one of those companies.
> Because now you've helped normalize exploitation as a behavior, and people inside Avis will feel just as justified in their bad behavior because they can see themselves as responding to "those awful scamming customers".
Companies have already normalised the behaviour. So much so that we don't even talk about it anymore. In fact we teach kids that companies will try and exploit them if allowed, or take advantage of them, and then teach them a bunch of tricks to look out for when booking or buying (e.g. resort fees, baggage fees, location fees, un-included taxes, et al).
It is laughable to suggest that this guy treating Avis just once like Avis treats their customers daily and for many years, has somehow caused Avis to act this way. You're clearly applying one set of standards to companies and a completely different set to individuals (i.e. effectively companies are beyond repute in your mental model, but individuals deserve your disdain for being as bad as companies even if occasionally).
I'm not going to defend Avis, but all of the rental companies have tons of complaints. For some of the complaints Avis in the right. (There are people who treat rental cars as completely trashable)
However, rental cars have a strong desire to completely disregard their customers. (Theres no sense of loyality, and they'll "find" damages that don't belong to you) The hilarious thing is that they're allowed to operate on airport property. (They have no flexibility in the way they operate to account for irrops or delays in travel for consumers)
What exactly is parasitic about this behavior? A parasite leeches resources without contributing anything. He paid the amount requested by Avis and adhered to the terms of the agreement that they had set. How is purchasing a product in accordance with the seller's terms parasitic?
Until the US mint changed its payment methods people were amassing air miles by buying dollar coins from the mint and then depositing them in their bank account.
What is the value of your time to keep renting cars? I think Hacker News is a bunch of people who are interested in making things. Creating things. Creating value. Please share with me the value of this other than the fact that you hacked the system the way PG likes to hear in the YC application.
It had non-monetary value, too. For one, he was essentially paid to go on a short vacation. He also had fun creating/solving a puzzle for himself. It had value beyond what he earned.
These things are interesting to read but it's also these kinds of things that cause companies to not do promotions like this anymore.
It worked out well for him but I think the scheme to buy dollar coins from the treasury and then use the same coins to pay back off the credit cards was brilliant. You also didnt have to involve employees in the schemes. I'm not sure what Avis will say to the branches he rented from.
> These things are interesting to read but it's also these kinds of things that cause companies to not do promotions like this anymore.
Or they just spend five minutes thinking about attack scenarios. For example in this case, if they had added "one offer claim per customer per day" it wouldn't likely have impacted any of their normal customers (or sub-1% of them), but would have stopped stuff like this.
The dollar coin thing was always going to bite them in the butt. They were literally selling money at a loss (it was a dollar coin, effectively sold at a dollar not including postage). There are numerous ways to exploit that, it was moronic.
Maybe it's me being naive thinking people won't always try and find a way to exploit something to the max. It took a lot of time to plan and figure out the cheapest way. In the end it is the company's duty to protect itself.
That seems like an alarmist statement. For everything you do [for the most part], there is someone that is going to take that to the extreme. The people who do those mileage runs are fairly rare in the grand scheme of things. They are fairly annoying.
----
Why do these people exist? I think that this in a way is a protest in response to the airlines and the way that they do business. Realistically, individuals have little power in exercising their disapproval of treatment by the airlines or from the effects of business decisions. (I.e. Award devaluations, stripping out connections to hubs at airports, monopolies over airports (I.e. CLT pre Southwest) Even as a group.. an airline won't respond to a person not flying with them.
He seemed to have fun, and the staff at the rental car company enjoyed interacting with him.
And I don't think this man did his mileage run to "protest" anything. He's probably a big fan of air travel, airports, and car rental companies and enjoys traveling.
Of course this makes me wonder about how the exploited companies respond. The exploiters can be identified (are companies afraid of lawsuits and public defamation)? Is such a story like an advertisement that may make someone (a reader) slightly more likely to use Avis (in this case) in the future?