Since we talk about right and wrong on this site frequently (see this morning’s post about the ethics of double-dipping on an insurance claim) I thought I’d share one reader email about loyalty programs that got me thinking.
It comes to us by way of David Rubenstein, who works for a nonprofit foundation in Washington:
If I leased office space for my company and the real estate agent gave me $20,000 under the table as a “thank you,” it would be an illegal kickback.
If I purchased a dozen computers for my office, and the sales agent gave me a digital camera as a gift, that would be a small, illegal kickback.
If I purchased travel services and an airline gave me a portion of a free flight, it would also be a kickback.
If we made the best possible purchase decisions, the airlines wouldn’t waste money on offering frequent flyer miles. They do offer them because they know we will make uneconomic decisions for our employers in order to gain personal benefits.
Frequent flyer mileage programs result in dishonest behavior.
Do loyalty programs make you dishonest? Is there a line between rewarding your customers — and bribing them? And if so, where is it?
The other issue is this one: How can these kinds of loyalty programs, which obviously influence purchasing decisions in a way that benefits the company, continue to be virtually unregulated?
Like many readers of this site, I believe in a free market. But a completely unregulated market is rarely good for the consumer.