Betrayed by a company? Here are 5 secrets for avoiding it

Kimberly Palmer/Shutterstock
Kimberly Palmer/Shutterstock

The call between Frank Alioto and his favorite cruise line went down like something straight out of a made-for-TV drama. You know that turning point where the hero actually turns out to be the villain? Just like that.

He and his wife, Susan, had accumulated 130,000 loyalty points over the years, using a special credit card called an “affinity” card that lets you earn more loyalty points, but can come with a series of unfavorable terms, like a higher annual percentage rate or a yearly fee.

“The program promises, among other rewards, that 125,000 points can be redeemed for a free five- to seven-day Caribbean cruise for two,” he says. And the Aliotos had collected for years, assuming that once they earned enough “loyalty” points, they’d get their promised cruise vacation.

But that didn’t happen. When they phoned the cruise line, they were told that as of Sept. 1, it had made some changes to their program. The itinerary they wanted wasn’t available at any price.

“I tried to explain to the representative that we had the points banked prior to Sept. 1, and never received any notice of any changes and would’ve booked prior to the Sept. 1 date if notified of any such change,” he says. “She then blamed the post office if I did not receive such a notice.”

Alioto is just the latest victim of recent and highly unpopular loyalty program reforms. Hardest hit are airline programs, which are adding new restrictions to their programs while also making them more confusing to the average passenger. But other industries, from supermarkets to cruise lines, are not far behind. Loyalty points seem to be the only investment that consistently decreases in value.

The question isn’t whether business can change the rules of the game at halftime. It isn’t even whether loyalty programs are fair to customers (the correct answer: not really).

The real question is: How do you prevent yourself from getting into this situation of being betrayed by a company in the first place?

Don’t give away your loyalty. Your money is valuable. Alioto spent years and tens of thousands of dollars trying to collect points that ultimately fell short of his goal. Who benefited? The credit card company and the cruise line, but not him. Before buying in to any loyalty program, make sure that you understand the true value of your loyalty and that you are getting adequately rewarded for it now, not at some point in the future.

Pre-screen the company. Looking back on a company’s track record gives you an excellent snapshot of its corporate DNA. A good place to start is the authoritative ACSI ratings, which assign a score of 1 to 100 based on a company’s customer-service performance. If a company’s done well historically, chances are it won’t betray you in the future — although that’s certainly no guarantee.

Look for signs of trouble. A change in leadership, a leveraged buyout, a bankruptcy filing — all of these should send up warning flares and should always trigger a review of your loyalty to a company. In my own experience, a bankruptcy is the leading cause of a downturn in customer service and loyalty to a company’s best clients, followed by a leveraged buyout and a leadership change.

Beware of “oh-by-the-way” notices. Companies that sneak changes into your loyalty programs or add surprise fees to their products may just be doing what’s necessary to turn a profit. And their actions may not harm you right away, which might leave you feeling safe. But the truth is, any company that tries to pull a fast one like this will eventually do something that will undermine your ability to collect the rewards that are due to you. Mark my words, you should break up with that company sooner rather than later.

Don’t be blinded by points and gimmicks. Remember: Nothing is free. You’re paying for the points you collect, either by surrendering your valuable spending data and other personal information, or by paying more for a product that is often less valuable. Your loyalty must be clear-headed and rational. If it makes sense to participate, then participate. If not, it’s time to find a new company to be loyal to, or to simply buy the best product at the right price. You know, the way people used to do it. Now there’s a novel idea!

I’m not sure if the Aliotos will get the cruise they want. They may have to settle for a lesser itinerary. Before they burn through their points, maybe they’ll take my advice to cut up their credit card and book their next cruise on a line that appreciates their business — not one that just says it does.

Are loyalty program rules fair to consumers?

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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 . Got a question or comment? You can post it on the new forum.

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  • polexia_rogue

    “now, not at some point in the future”

    this is my favorite. i have done the “airline points” thing but it always seems like a waste of time (unless you travel alot.)

    the “loyalty” program i love is hotels.com where you get a “free night” for every 10 nights (they add your past 10 room costs and divide by 10- so you cannot get a $200 “free room” if your last 10 stays were in $50 budget hotels.)

    I call it a “free coupon.”- and i like the fact that it happens reasonably fast. (if you are doing a cross country trip like i was.)

  • Cybrsk8r

    Or better yet, have NO loyalty to ANY company, because they don’t have any towards you.

  • Carver Clark Farrow

    A fair and balanced article on loyalty programs. Bravo. Very informative.

    Loyalty is total BS. The company isn’t loyal to you. They give you perks and bennies only as long as they see you as valuable. You must see your program the same way. I used to be platinum with Marriott. They gutted the benefits that mattered most to me and my favorite Marriott hotel changed flags. I dumped Marriott like a bad habit.

    Today, my best bet is Starwood. But I’ll stay only as long as it’s beneficial to me. I just dumped American Airlines after 20+ years. Didn’t shed a tear. Virgin works better for me.

  • Raven_Altosk

    Why are you protecting the identity of the cruiseline and the card company? Both seem relevant to the story here.

    And yes, be mindful of loyalty programs. I look at them as a perk, not as a promise.

  • http://elliott.org Christopher Elliott

    It’s a little complicated. These posts also appear on the Mint blog, and they have a policy about naming names. It would have been my preference to name the company and solicit a comment on its utterly useless loyalty program for this story.

  • James M Barnes

    Are loyalty programs fair? They can be if you work at it. We have used my Marriott Rewards CC for years. Never had a problem. We just returned from a vacation in Vail…free room the entire stay, (it was great…fireplace separate bedroom etc) . Regarding airline programs….they work if you’re flexible. Two years ago we used miles to fly to the UK in business class. But….we took the days seats were available and weren’t locked into specific dates. If your expectations are unrealistic, (i.e. anytime anywhere), you’ll be disappointed. Not saying it’s right but just the way it is…..

  • BillCCC

    What does this sentence mean “The itinerary they wanted wasn’t available at any price.”? Does that mean that the exact cruise they wanted wasn’t offered anymore? Could they have taken a different cruise or trip? I am not sure what changes were made to the program that lead to this article.

  • Fishplate

    I have an affinity card…it pays me in cash money, on a regular basis. Not some ephemeral “points”, which may or may not be useful when I accumulate enough.

  • Deepstardiver

    Yes loyalty programs are fair IF you read the rules and keep on top of them. Many times i have found it cheaper to use points/miles to upgrade or exchange for a premium air ticket than to pay $ for it. BUT i do all on 1 airline so I “game ” the system for “bonus” point offers, shopping bonus, etc. I also fly a fair amount 25+K miles yr. Not a super road warrior but enough to keep me in free luggage checks with the family. Also i live near a hub/ large city and often fly to another hub/large city so competition is still there. I also book a fair amount inot the future. The times I had to fly “right now” I have used “standard award tickets” at double the miles BUT it saved a ton of $ over a walk up fair , even in coach.

  • MarkKelling

    Any program where it takes years of actively participating to accumulate enough to get a single reward is not worth it. Rules change yearly. Availability of your goal reward changes as well and, as it did in the case of the OP, can disappear before you reach it.

    But this does not mean that all rewards programs whether a frequent traveler program affinity credit card or even your grocery store card can’t all provide useful savings to you if you don’t start doing crazy things. If you accumulate the proper credit quick enough rewards can be very rewarding.

    I was collecting Continental miles for my dream trip to Australia. CO was partnered with Qantas at the time and I was dreaming about flying 1st class to Sydney using my miles. So when I finally got enough accumulated, I went to book my flight only to learn that CO and Qantas had just parted ways and were no longer allowing CO miles to be used to purchase a Qantas ticket. Bummer. So me and 3 of my closest friends went 1st class to Hawaii instead on those miles. What this taught me is to aim for easier attainable goals in whatever rewards program you belong to and if the dream comes true then all the better.

  • MarkKelling

    I think loyalty is the wrong word. I take advantage of companies whenever I can by using their rewards programs, whatever they call them, to my benefit. Of course when it comes to travel rewards programs, it helps to be a business traveler where you are constantly on the go and can build status with multiple companies.

  • John Keahey

    Sometimes the magic works, sometimes it doesn’t. Be prepared and stay informed. Key is: Never fall in love with a corporation because it will never love you back. I’ve been fortunate with Delta, Starwood and American Express. When it ceases to work for me, I’ll move on. “Loyalty” is the wrong name for these programs. Should be: “Advantage” because as long as it works to my advantage and they give me what I want at the price I want, I support them.

  • cowboyinbrla

    So, do our posts here on YOUR site also appear on the Mint blog? If so, where is this disclosed here? And if not, why not name the company in the comments here, where it won’t violate Mint policy?

  • Joe_D_Messina

    I was wondering the same thing. It sounds like they tweaked what cruises were available as rewards. (Or they changed their overall cruise offerings, which would have the same net impact on the OP.) I get that from the line you quoted, along with the end of the article where Chris says they might have to settle for a lesser itinerary.

  • Joe_D_Messina

    The root question in most of these articles is how individuals define “fair.” All these programs allow the company to change the terms at any time, which leaves the customer chasing a moving target. This case was typical, where the OP was on the verge of redeeming, only to have the terms change. However, regular prices constantly change, as well. If you change the facts of the story just slightly to where the OP had been saving real money for a cruise that cost X amount, only to find the price had risen, then I don’t think anybody calls that unfair. But people don’t look at rewards programs in the same way, even though that is effectively what happened in this case, only it was rewards points being saved and not real dollars.

  • cowboyinbrla

    It’s all about expectations, as one poster noted below. If you have to save points for five or six years to get your “dream” trip, you’re probably going to get screwed along the way: the travel provider will stop going to that destination, or they will jack up the number of points needed, or otherwise change the rules. My rule of thumb is never to count on freebies to meet your “dream” expectations.

    And yes, unless you travel regularly enough that you can get a mid to upper level status with one airline by concentrating your miles, you’re better off shopping around for fares. If one airline is consistently cheaper 80% of the time, it may be worth it to pay a small premium on the other 20% of the trips to enhance your status. But if your destinations vary so much that no airline serves all of them, and prices are all over the map, then aim for the least expensive solution that meets your needs.

    But even if you do, collect the miles. You may be surrendering a few tidbits of info (name, address, email, and the place you fly) but that’s already out there, somewhere, ready to be mined. It’s not like you’ll pay less for the fare if you forfeit the miles, and eventually, they may be worth *something*. Not two first-class seats to Europe or Hawaii, probably (see “dream expectations”, above). But coupled with a handful of other earning opportunities, I usually accumulate enough miles for a domestic saver ticket on at least one airline every other year. And since I like going to lower-demand, off-the-beaten path destinations, it pays off.

  • $16635417

    So..is this a codeshare column? ;)

  • http://elliott.org Christopher Elliott

    Oh, that’s funny. I probably deserved that. Actually, it’s syndication, which is something I’ve been doing for a long time.

  • http://elliott.org Christopher Elliott

    Thanks. Fair and balanced. Maybe I should add that to my tagline?

  • Daddydo

    In this world of loyalty points, usually involving credit cards, you are making alot of money for everybody but yourself. Free points for the frequent ( I said frequent – more than 10 times a year) flier or hotel or car rental traveler don’t cost anything until you fall into the trap of double points if you use their card. Points are a hard thing to redeem, with rules, taxes, and a million other excuses. Most points involve the full value of your purchase rather than the public sales. A cruise ship on the 27th of October leaving from Baltimore for 7 nights ( I did not name names) attempted to initiate not 1, but 2 loyalty cards. I did not bite because my cruise was on sale for $1000.00 deluxe balcony, thus it’s cheaper to pay than to use points for the full price of the same cabin.
    Use cards with financial rebates:
    AX blue gives 5% back on gas and groceries 1% for everything else
    Chase sapphire 5% on friday restaurants 1 everthing else
    Capital offer 1 1/2% on everything.
    If Alioto had 130,00 points earned, I would have had $1500.00+ and been able to purchase any cruise that he was being ripped off of.

  • DavidYoung2

    Yup, as does the Amex / Costco co-branded card. It’s hard to devalue a check you automatically get in February (you don’t even have to ask for it.)

    My only loyalty is to Amex – their Costco card is great for cash back, Delta gets me free bags and Zone 1 boarding and Platinum gets me lounge access, Global Entry, $200 airline credit, etc. All of which I use. And best of all, their MR Points can be spent like real cash, not funny miles, at 1.2 cents per dollar. So that sets a floor on the minimum value, and they’re often worth more with transfer bonuses to the airline programs.

  • John Baker

    And pay royalties to Fox News? Why?

  • Lewis Lebetkin

    There is one possible error in your piece. You say that the consumer is paying for the rebates and loyalty points. Actually, I believe thet rebate cards and loyalty point cards often charge the merchant a higher discount on the sale, raising the cost of selling the merchandise. The price goes up and as a result everybody is paying for your free flight.

  • FQTVLR

    Loyalty programs can be good in certain circumstances. For instance I live in a city where one legacy airline dominates. I travel internationally on business (in peasant class) and prefer non-stop flights so that program works for me. I also understand the primary rule of business loyalty programs—the customer is loyal to the company but the company is not loyal to you. I do not stockpile my miles and use them when I can. And I never believe that I am important to the airline. Never.
    I am not sure what the problem is regarding the cruise line loyalty program. Since we do not what the changes are to the program or what they mean when they say that the cruise is not available at any price it is hard to form an opinion on this situation. Is the cruise completely sold out or is the line restricting the number of cabins available for points? My sympathy is with the OP but I am still left a bit perplexed as all is not explained.

  • Justin

    I tend to be leery of customer loyalty programs, but don’t shy away completely.

    Choice Hotels’ loyalty program saved me THOUSANDS on my trip to Europe. Points were easy to redeem and restrictions were a nonissue. Booking required logging onto their website, selecting the hotel I wanted, and redeeming the points. Wallah!

    When I had a bad hotel experience in Rome (bait and switch, forcibly moved properties, then downgraded), Choice after some nudging, credited back my loyalty points + 1 extra day. I say some nudging as I got a moderate run around for a short term “investigating due to international property”. I called back 2 weeks later, got a sympathetic supervisor, and problem solved.

    All and all. I think loyalty programs boil down to read the fine print. In my case, having 2 weeks of free stays was worth my loyalty.

  • emanon256

    Even I voted no :) I am so sick of the “Our terms can change at any time without notice.” And I agree with a lot of what Chris says on theses, though I still think loyalty programs can be used to your advantage in certain situations, just don’t count on them or let them change you habits.

    I am actually frustrated by a change Untied just made. I had enough miles for the wife and I to go to Asia round trip in first class through the Star Alliance and we were looking to go next summer. United just posted a new mileage chart and at the end of the year and the mileage to Asia is almost doubling. We don’t even have enough to both go in Business Class, so we will either not be going, or if we do, flying coach. So much for experiencing the good life. However, I got the miles from normal travel, without going out of my way to spend extra or differently, so I am not actually out anything other than disclosing my personal information and allowing the airline to track me. But it is still disappointing.

  • emanon256

    I actually prefer the other programs where they don’t take the price into account. I can stay at a Farifield Inn and use my points to stay at a Ritz Carlton.

  • Mark Carrara

    My wife and I use a bank CC loyalty program. The points convert cash which you use to book travel or get gift cards. If we just got a check at the end of the year it would go to normal expenses. A forced travel savings account is better for us. I assume there may be some cost, but the card has no direct charge because the bank services our mortgage and gets enough there to cover the ‘free’ cc.

  • Carver Clark Farrow

    +1

  • emanon256

    Marriott just dropped one of my favorite perks, thoguh they brought back free breakfast 7 days a week which is nice. I have Lifetime Platinum, so if they are the cheapest it works out, if not, oh well. Funny thing was I earned Lifetime Platinum, while staying at Hiltons for two years because of all of my prior Marriott stays. I always wanted to stay with SPG, but they never had any at a decent price in any of the places I worked when I was traveling. I do stay at the cheapest closest least dumpy location, and still managed to get a lot out of the loyalty programs. Hilton just did a huge devaluation and I am about to loose status, but I don’t mind as I got all the status and points from stay at the cheapest/closest hotel to my last client.

  • emanon256

    I was just at the same hotel in Vail, with what sounds like the same room type. Very impressive hotel! I was quite happy there.

  • emanon256

    Ive got a cash back card, and my Marriott card. I used the cash back fro almost everything. The Marriott card has a $65 a year fee, that comes with a certificate for one night stay. I go to the same event every year, and the hotel typically costs ~$200 a night each year. I use the certificate every year for that stay. Its not a free night, but its a $200 night for only $65. Looking at it that way, I have no problem paying the fee. If the hotel gets re-flagged, or the event moves, I can cancel the card at any time. I see this as a win/win.

  • Justin

    Nothing wrong there. The benefit depends upon the consumer. One might opt for the cash, and another (you), for a travel savings account.

  • Justin

    Correct me if I’m wrong, but Reward or Loyalty programs, where customers don’t alter purchasing habits aren’t inherently negative.

    If you stay in Hotels often – staying with “Brand X” to earn free nights = Potentially Beneficial
    If you travel often, accumulating points for necessary travel = No Harm

    I think what Mr. Elliott and many here miss is “alter behavior”. Brand loyalty is great. I stay in one particular hotel chain when economically feasible. I by no means commit myself when the price isn’t right.

    So by keeping to my ordinary spending habits, I earn rewards over time. I’m out nothing, and at best, I acquire chances to redeem points for future benefit.

    Consumers need to make wise purchasing decisions and realize there’s more to a financial decision than “earning points”.

  • Lindabator

    PERKS – same way I look at them – no expectations, happy surprise when I get the perk. :)

  • James M Barnes

    The Marriott Mountain Resort….it was great and I used points accumulated with my CC and various stays.

  • Helio

    I used to be loyal to an airline, but it never worked fine to me, now my decision is based in convenience, but I have friends who love it – they usually get upgrades and seats for free. The fact of one of them is able to accumulate more than a million miles per year may help…

  • Carver Clark Farrow

    I was pondering the underlying assumption about loyalty programs and the potential to increase spending. It occurs to me that the concern might be overblown. Price is an important factor in purchasing decisions, but it’s not the only one. Don’t we all shop at our favorite clothing store; shop at our preferred grocery store. Cheapest price is not thesole determining factor. Therefore, I have to think that some portion of travel is not purely based on price.

    I rent from Hertz LAX because it has 3 times the number of shuttles that Budget LAX has and I hate waiting by the curb. I stay at Westins and Sheratons because I find the beds to be more comfortable than other chains. I even bought one for my home.

  • MarkKelling

    The CC thing is true. The more benefits a card pays the user, the higher the interchange rate is to the merchant.

    But the consumer may also end up paying more for the things they choose if they are chasing rewards instead of looking at the costs of the items being purchased.

  • ChBot

    Well, it’s not because you’ve managed to, at last, do it once …
    But it sure is a path in the right direction !…

  • ChBot

    Wouldn’t it have been quicker to list where you’re not loyal !… :-)

  • http://elliott.org Christopher Elliott

    I love you, too.

  • Justin

    +1.

    Mirroring my sentiments. “Alter Behavior” are the two operative words. If your spending habits lead to “Secondary Rewards” – Great

    Don’t just spend to spend. Spend wisely and enjoy any awards one does accumulate. Just don’t “Expect” things to be there forever, so take advantage when the opportunity arises.

  • Bill___A

    I don’t care for cruise lines in general, and each time I read about some other issue with them, it makes me even less inclined to deal with them…not that the hotel or airline programs have been all that great either.

  • ChBot

    You’re welcome !
    But it is truly refreshing when you bypass the sensationalist attacks against “frequent” or “loyalty” programs and recognize that, when you can get “instant” rewards for it, they might be worth a shot.
    And it’s not because I don’t agree with you that they induce irrational behaviors (to say it in a politically correct way), but because most of your recent articles on the topic where written with the wish to induce a knee-jerk reaction, hence probably diluting your true message