Singapore Airlines responds and doesn’t respond to the mileage broker story…

About a month ago The Milelion broke the story about mileage brokers and how they were providing easy ways to buy Krisflyer miles, while potentially controlling multiple fraudulent accounts at the same time. What this means for legitimate Krisflyer members is less award space and potentially having to shell out higher amounts for standard awards.

Using a dummy account with the name Niole Lim, I successfully managed to get 2 transactions of 1,000 miles each past Krisflyer’s verification process. After I had finished the article on Aug 11, I turned myself in to Krisflyer membership services, telling them about the research I’d been doing and the implications for their program.

One day later, Aug 12, I got this reply from Krisflyer

Dear Ms Lim

We are writing in follow-up to our earliest response to you.

Firstly, we would like to thank you again for highlighting the matter to us.

We would appreciate it if you could provide us more information on the online mileage brokerage site. This will aid us in our investigation and take the matter up to the mileage broker to cease their activities which have contravened the Terms and Conditions of KrisFlyer membership programme.

May we also request you to provide us with the American Express credit card account used in performing these transactions? Please also advise us if the mileage broker effected the transaction into your American Express credit card first, which was later transferred into the KrisFlyer membership account or was it directly transferred from the mileage broker’s American Express credit card?

We note that you were able to perform two separate transactions into the KrisFlyer account 8XXXXXXX under your name, Niole Lim. In this instance, it was not possible for us to flag out the transactions as no discrepancies were detected.

As for KrisFlyer members, who are found to have contravened our programme guidelines, their accounts will be placed on audit and no further transactions can be made through the account.

Any flight tickets redeemed through the same account will also be suspended from use. Singapore Airlines will not honour the KrisFlyer awards, be it flights or upgrades, or any other benefits which have been redeemed with mileage that have contravened our programme rules.

We look forward to your response on the above for us to further look into the matter.

Ms Lim, thank you for writing to us.

Ok, I thought. So I assume they’ll investigate this and act accordingly. So I provided them with a full account of my activities with the mileage brokers, together with a link to the article I’d written. Then I sat back and waited for them to confiscate the miles and deactivate my account.

And waited.

And waited.

Aug 24 came and there was still no reply from Krisflyer. It had been 13 days since I outright told them I had defrauded their system, and Niole Lim’s account was still alive and well.

Determined to be punished for my indiscretions, I wrote to them again on Aug 24 asking them whether they had any updates.  And got a response 10 days later.

Dear Miss Lim

Thank you for your email of 25 August 2016. The purchase of miles from online mileage brokers has been raised to the relevant departments for follow up. Singapore Airlines takes a serious view of any breach of the terms and conditions under the KrisFlyer programme, and reserves the right to suspend or terminate such accounts.

You have confirmed that all KrisFlyer miles in your account 8XXXXXXXXX (2,000 KrisFlyer miles) were purchased from online mileage brokers. In view that this contravenes the KrisFlyer programme rules, we regret to inform you that your KrisFlyer account has been suspended pending audit checks and the miles will be forfeited.

Miss Lim, thank you once again for your feedback.

Regards
KrisFlyer Membership Services

Ok, so that is and it isn’t an answer. They’re taking away the miles and closing the account, which is fair enough. I knew that US$50 or so I spent on this was going to be a writeoff. But they’re not addressing the underlying problem. What about their security measures? What about the multiple fraudulent Krisflyer accounts the mileage brokers control?

And it gets better. Despite what they said,  as of today, 7th September, I can still log into Niole’s account and transact as per normal!

krisflyerniole

 

I mean, if I’ve been so brazen about this and no action has been taken, can you imagine if someone were trying to do this on the quiet?

Mileage brokers are not a problem that is unique to SQ. Their claim to be able to transact in pretty much any major airline currency implies that this is a problem that affects the industry as a whole. But airlines owe it to their members to take active steps to protect the integrity of their programs.

Anyone knows what I can do with 2,000 miles?

cover photo by jez

19 thoughts on “Singapore Airlines responds and doesn’t respond to the mileage broker story…”

    1. credit card rewards programs based in the US mainly. they allow you to add “authorized users” and you can transfer points to them without running into the name mismatch issue

    1. i was tempted to do that, but wondered if that would cross a line into actually defrauding KF and might lead them to hunt down my actual account…

    1. you hit the nail on the head my friend. I do enjoy the perks of miles, but I believe there is a proper way of going about doing so. Imagine you’ve taken the time and effort to plan your spending carefully to earn your miles, you’ve scrimped and saved and now you finally have a good amount to take your family on that dream trip. Then imagine that you come up against people who have acquired large amounts through illicit means who are effectively pricing you out of the market (or out of saver space at least). I don’t know about you, but I’d feel pretty hard done by that. So long as these avenues exist, they only penalize members who play by the rules. I certainly wouldn’t call that a “good thing”. Now we can have a long discussion about what the actual harm is to SQ (i think i touched on this in the original article- making the point that SQ still gets paid whenever someone transfers CC points to miles) or why the rules are the way they are, but at the end of the day the rules are the rules. that’s something that the majority of members play by, so why should they lose out for doing so?

      1. The way I see it – airlines set aside a quota for award redemption based on what they set out in their T&C. Perhaps a zero sum game? Abuse of the system may lead to taking away a privilege from someone else who rightfully could have been given an award seat. ie, they are ruining the system for everyone else.

        There are legit ways to broker miles. Nothing to stop me from paying someone $x to redeem a ticket for me as a nominee. Since a mile redeemed is a mile earned by someone else, what difference is there if a broker does this on behalf of 2 willing parties (notwithstanding a third party is now profiteering from the transaction which is not the intention of how FF work). Perhaps the question will be why some of us are so bent on ‘following the law’ and what is wrong with an outcome based solution rather than follow T&Cs.

        My thought is that if the system is not designed for a series of activities, then it needs to be fixed. If an airline sells banks 1 million miles at $Y for their credit card programs but am consistently getting redemption requests far exceeding 1 million costing me more than $Y then what is going to happen? Maybe they will charge banks more per mile sold to them. Maybe they will devalue miles. Maybe they will reduce the number of saver awards. Maybe they will eliminate saver awards together and cater more to revenue seats. Maybe they will do all these anyway regardless just to earn more money.

        Following the law is one thing. It is an individual’s decision. However, a system is set up based on a set of rules and assumptions. If it changes, then the system has to change.Hacking the system does not imply bring the entire system down by carrying out activities it was not designed for. Hacking in this case (and to me) is about discovering how to maximise returns. It is not in the best interest of the business to teach their customers how to maximise their reward programs so it is something we need to figure it ourselves. Sure, they may not be pleased more and more customers ‘figure it out’ but it is all within the boundaries set which accounts for the ‘worst case scenario’, their model will not break. Examples are a certain bank who limits $2k per month for 4 miles. Another limits 10x pts to 12k a year. That is probably one of the measures put in to sustain the business (all things equal and no changes in partner agreements).

        TLDR – Someone (or several parties) have to pay for abuse of the system. I didn’t abuse it ,so why should I pay the price of it?

        Perhaps a reasonable analogy… I drive, and I pay motor insurance. Just like everyone else. Someone gets a minor knock, but decides to profit from it and file an unreasonably large claim to the insurer. The system was not designed for this. The end result? Premiums will go up. Or coverage will drop. Or both. For everyone who drives safely, why should they have to pay more because of these fraudulent claims? Heck, if I spot a case of these fraudulent activities, I too, will whistleblow.

        1. There are legit ways to broker miles. Nothing to stop me from paying someone $x to redeem a ticket for me as a nominee. Since a mile redeemed is a mile earned by someone else, what difference is there if a broker does this on behalf of 2 willing parties (notwithstanding a third party is now profiteering from the transaction which is not the intention of how FF work)

          This scenario you described is different from what we’re dealing here. Suppose I want to redeem a ticket, so I am put in touch with John who agrees to do it on my behalf for $X. That doesn’t dilute the pool of existing miles (unless of course John transfers CC points into his account with the exclusive intention of redeeming the ticket for me) and it’s relatively small scale because it’s limited by John’s 5 redemption nominees (assuming John can’t just freely add and drop nominees because that will attract fees and attention from the fraud dept). These types of transactions are relatively harder to broker, take more time to set up, impact is relatively small.

          That’s different from an easy one click to buy miles model that most mileage brokers offer where the miles go directly into my account to do as i please. No constraints on nominees, no need to find a counterparty to redeem on my behalf. faster, higher volume. more impact. more detriment to other users.

          with regards to the point you made about hacking- there are lines in what we do between what’s acceptable and what isn’t. the majority of us stay on the right side of that, but there are others who go beyond (eg when IHG gave points for downloading their internet toolbar but didn’t limit it to 1 download per person and people ended up writing scripts to automate the downloads and get a gazillion points. you could argue they should have taken steps to fix that on their side, but that to me is more on the fraud side than the legitimate hacking side). buying miles to me is going beyond that line, and is very different from carefully planning your spending each month so you just max out the bonus points on each card then switching to another.

          1. so I am trying to figure if it is a differing view, or an alternate view. You’re looking at impact, which i don’t disagree. That said, if it is fraud, that is what it is regardless of impact.

            I haven’t read the t&c in detail so I don’t know if by selling miles to a colleague and then redeeming an award on his behalf violates anything ( a thin line perhaps). Maybe it would be more accurate to say there are legit ways to transact (rather than broker which is by definition probably incorrect in the scenario).

            If the discussion revolves around fairness then it goes down another path.

            To be honest, I don’t consider what we do miles hacking. We’re maximising the avenues available to us. A lot of hacks to me, stems from the ability to stack. Have you watched Extreme Couponing? LOL

            There is this case where after buying tonnes of stuff with the right coupons, in the right quantity, redeemed in the right sequence, the store ended up having to pay the customer for buying stuff from them. It’s true! Brilliant. That’s a hack.

            Maybe it is occupational hazard. To me, boils down to T&C. we buy miles all the time. I see ‘outcome based’ solutions being the norm.

            BTW in the past there were brokers who will issue you a ticket instead of dumping miles into your account. That was a long time ago when i first stumbled onto these brokers. It did take a while to figure out the whole model cause they really could do all the booking for me with really low rates for premium seats. Sounds too good to be true. Like a scam.

            Anyway. they say good guys finish last.

            And yes.. part of my job is to see to it that policies are followed and explain the intent of a clause. If need be (for various reasons) I’d recommend a change in a policy.

            I don’t work for or with SQ in any way. I do have my guesses on the whys. Piecing the clues from the responses from SQ and the claims from brokers.. At some point one side is gonna have to concede. Or have they already?

  1. Hey man you actually use your own money to help them investigate a case. They should reward you not penalize you. Like how Apple or Facebook rewards people who find and report bugs not terminate and close their account.

    Perhaps you should not waste your time or $$$ on people who do not appreciate your time and effort to report s genuine concern

  2. did you make some of this stuff up? some of your sources are not checking out. I just tried to sell some of my points to these folks and got different information. can you help me sell my points??

  3. This is really incredible work. I have a perspective on this too (not sure if it’s alternative…)

    KF Miles are a currency; albeit where the exact value is not transparent. SQ “mints” this currency by selling these miles to companies/banks to distribute. SQ therefore always knows how much “credit” it needs to honour.

    However, I’m also sure that the viability of its business model depends on a significant amount of miles being wasted by recipients.

    The brokers essentially prevent wastage by trading the resource – supply and demand.

    I think this is quite dangerous in the long run. Why? Because it is messing with the SQ business model. If 100% of the miles that are issued are redeemed, SQ would be in serious serious trouble.

    I therefore share the concern that the prevalence of mile trading could eventually lead to massive devaluation that will seriously harm the maximizing of the potential of our miles.

    So here’s hoping that less people will buy miles… =)

  4. Good post and thanks for the sharing.

    From sq reply, I am doubtful they will look into this issue. I felt that they do not benefit from coming up with new processes or software to spot people who buy from brokers. To sq, coming up with compliance check, needs more manpower and more IT software. All these lead to more cost. If many miles customers decide to boycott sq mileage flight, they will still have sufficient miles customers to book flights and lesser call up by customers on waitlist issues. To them, not doing anything is profit.
    Hence, I felt don’t waste anymore money to test their system. You inform them just to get your account potentially suspended. Cheers. 🙂

    1. thanks! like I told mark, i’m pretty sure nothing will happen. I knew the money I’d invest in this exercise was a write off anyway, but at least it made for an interesting read!

    1. thanks mark- haha still radio silence from them. I think they won’t do anything lah and there’s really no point pursuing this alr. Still it was fun trolling.

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