The hotel costs a little more but don’t worry, the miles are “free”

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If you read this site, you know in which direction I lean. I believe most frequent flier and stayer programs unnecessarily divide us into castes, compel us to make mindless purchases, and encourage arrogant, entitled behavior.

So when David Chen recently asked me if he should pay for miles, my immediate and reflexive answer was: Probably not.

This feature is called Is This a Scam, so you know what’s coming next, don’t you?

Maybe I’m being too hasty, I thought. Chen’s question deserves a fair hearing. So here we are.

Chen recently signed up for a Rocketmiles.com account through a targeted e-mail from United Mileage Plus. Rocketmiles allows frequent fliers to earn “previously unheard of quantities of loyalty program miles and points” when booking rooms at high-quality hotels, according to the site. The company promised that by using Rocketmiles, Chen could earn 1,000 or more “free” United Mileage Plus points per reservation.

“After receiving the sign-up confirmation e-mail, I proceeded to Rocketmiles.com and made a booking for a late January one-night stay,” says Chen. “The rate of $179 was shown and the price was the same as available on Kayak.com, Hotels.com or Booking.com, so I went ahead and made the reservation through Rocketmiles.com, expecting to receive 1,000 loyalty points upon completion of travel.

What Chen didn’t expect was that his credit card would immediately be charged $220, an amount that included taxes and “fees.”

“That $41 additional amount seemed kind of high, and sure enough, it works out to be a 23 percent surcharge on the $179 quoted room rate,” says Chen. “A bit of sleuthing determined that the official hotel and sales tax rate for that area is a combined 11.2 percent, or 11.8 percent less than Rocketmiles was charging.”

So he wondered: Is Rocketmiles inflating the taxes and fees to cover the cost of the loyalty points? He asked. Here’s Rocketmiles’ response:

We purchase our rooms at pre-negotiated, discounted rates, and then sell them at competitive market value on our site. The taxes and fees include local taxes as well as any applicable booking fees, and we do not have an itemized breakdown.

We understand that we may not have the lowest price for this particular trip, but hopefully the mileage reward still makes us a good value for you, or if not on this trip, keep us in mind for future travel needs.

Chen doesn’t buy it.

“In effect, they’re saying, ‘Sorry for charging you more, but we hope the mileage reward makes up for the difference,'” he says. “Except that they’re charging an additional 11.8 percent for those mileage rewards, which means they’re not really rewards.”

Chen canceled his reservation and made a new reservation with Booking.com, which didn’t include the 11.8 percent surcharge. But he wants to know if this inflated rate is a scam, and I think it’s an interesting question.

If a business discloses a rate before you click the “book” button, it’s not a scam. But this mysterious 11.8 percent surcharge sure does look suspicious to me. Maybe it doesn’t rise to the level of a full-fledged scam, but some of you, dear readers, will probably find it a little scammy.

We’ve always known that frequent flier and frequent stayer points are not “free.” A business raises prices to cover the cost of the points, as Rocketmiles seems to be doing in this case. It’s really up to you, the consumer, to say whether paying 11.8 percent more for a hotel room is worth it. Are the miles worth the markup?

Some of you might say yes, they are — and, of course, you are free to do business with whatever company you choose. I can’t save you from yourself.

But others see the problem with this system and know what I already do: that there are more losers than winners when it comes to loyalty programs.

Like me, maybe they simply refuse to play a game where the rules are rigged to favor the business and can be changed at any time, for any reason. Smart choice.

Is David Chen's Rocketmiles.com offer a scam?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at chris@elliott.org. Got a question or comment? You can post it on our help forum.

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  • Bill___A

    Everything should be disclosed up front, fees, surcharges, etc.

    It is also a good idea to state estimated taxes.

  • MF

    I am reminded of a quote attributed to P.T.Barnum, “Never give a sucker an even break.”

  • Fishplate

    Yes, absolutely. If the total is not disclosed before you make the final click, it’s a scam.
    If it’s not disclosed until just before the final click, it’s not a scam, but it might be devious…

  • Tom McShane

    A corporate spokesperson should be literate enough not to use “hopefully” in an incorrect manner.

  • FQTVLR

    If the additional fees are not disclosed prior to confirming the reservation then it is certainly a scam. And I find it a scam if the additional fee is added on the screen right before you confirm the reservation, When you look at the hotel the total price including taxes and fees should be disclosed before even selecting the hotel.

  • Ben

    “and we do not have an itemized breakdown.”

    If they charge more than they originally quoted, it’s probably a scam. If they can’t explain the source of the price increase or how they determined it, then it is definitely a scam.

  • KanExplore

    In this instance I don’t know if it’s a scam or not. The full price should be required to be disclosed upfront, though in the case of hotel bookings, it is standard for the quote to be before taxes. I do think that any “surcharge” imposed by the booking company should be included in the quoted price, not listed separately after the customer clicks through. It is clear that any given booking site might or might not have the best price for a given room, so the fact that Rocketmiles ended up higher here is not proof in itself of a scam if the price was properly disclosed. It looks like Chen is a smart consumer in checking against other options.

    The word “free” is overused and badly understood in many ways, but it seems to sell well, so people don’t hesitate to toss it around loosely. Most people value United miles at about 2 cents each, or perhaps a bit less, so that 1,000 would be worth around $20.

  • I used Rocketmiles once when they first started, but quickly realized I was overpaying. That was the first and last time.

  • MarkKelling

    No where in any of the documentation I have received from either United or Rocket Miles state anything is “free”. All of it states you “earn” the miles you receive.

    So you pay a “booking fee” included in your price to Rocket Miles to get the United miles. It appears to work out at about the going rate for the value of miles. I don’t see this part as a scam, but rather as a not very good deal. I have chosen not to sign up. Since I have not signed up, I can’t go through the booking process to see exactly where the total total is presented. Therefore, I can’t really state that their approach is a scam. Given their note that they don’t have itemized statements for what you have purchased does make me leery about their entire business process.

    Guess if you were really desperate to earn some miles, it might be OK. But I would rather collect miles I am not paying extra for.

  • John McDonald

    why estimated ? Just state the taxes. Don’t need a breakdown. Do as in Australia, state the price you pay, not price before taxes.
    Australia has a 10% GST(good & services tax) on most things except basic foodstuffs, education & health(health is already a rip off but that’s another story).
    Any prices quoted business to consumer, MUST include the GST.
    If a business tries to quote a price & then add the GST later, the consumer can say get stuffed, I have your price which includes GST, whether stated or not.
    The only time business can quote not including GST is when it’s a business to business transaction. The buying business can claim back GST paid against GST collected, in a monthly or 1/4ly statement to the Australian Tax Office, which is federal like IRS in USA. States can’t impose taxes in Australia. But they get away with calling things duty or fees or whatever names they can think of, they just can’t imply it’s a tax, whatever the legal definition of a tax is.

  • John McDonald

    no business has to give an itemised breakdown if they simply give you the total cost you have to pay.

  • John McDonald

    we sell package deals, where suppliers don’t want the breakdown given in any form. Part of our purchase agreement. So we will never EVER give an itemised breakdown of costs.

  • larry bradley

    As a business owner, I agree with you, but the point was that they said they did not have an itemized breakdown, which is false. They should have just said it was proprietary information instead of lying.

  • S363

    I have long collected United miles, and have taken many nice trips with the miles used, mostly from the Mileage Plus card & signup bonuses. We’re going to Bonaire soon, with miles earned. I noticed that the “taxes & fees” I paid on that trip were more than usual. But in doing a little checking I found that the $35 departure tax one used to have to scramble to pay at the airport on departure day is now included in the airline ticket. This is certainly more convenient. United passes on that charge as part of the fees when booking an award ticket. Indeed I found it as a line item on my receipt.

    In sum: Are the excessive fees Mr. Chen was charged a scam? I would say yes. Are all taxes & fees connected with booking award travel scams? No. Can one benefit from frequent flyer programs? In my case, definitely yes.

    I understand that there is no free lunch. But if a “free” lunch is offered, many don’t take it, but I do, I’m ahead.

  • Steve Rabin

    There’s one part of Rocketmiles’ canned response that bugs me: “as well as any applicable booking fees”. That part must be disclosed up front as part of doing the transaction. Government-mandated taxes are a different story (although they shouldn’t be–they know the tax rate), but anything levied by either the booking company or provider should be provided up front.

  • KanExplore

    Agreed. There’s a big difference between taxes imposed on air tickets which go to some other entity than the airline, and fees imposed by the airline itself. You’re always going to pay the former whether on a paid or award ticket, but there can be some substantial differences in the latter. United miles are my favorite type due to the immense partner network, flexible routing rules, and lack of any fees on award tickets beyond the unavoidable government charges.