Many airlines have rewards programs for businesses. These programs allow you to double dip, as you can accrue points in your personal frequent flyer account, and also in the business account (though you earn points in the business account at a slower rate). For example, on the blog we’ve extensively covered American’s Business Extra program, which I’m a member of and love.
Delta has a similar business program called SkyBonus, and the way the former employee of a company used it has landed her in jail. NH1 has the story of a 36 year old New Hampshire woman who worked for Brookstone until 2013, when she was fired.
She used to be an executive assistant for the company in charge of administrating many functions, including controlling miles. After she was fired she used over 2,000,000 SkyBonus points to travel around the world, including to France, Italy, and Greece. The company only found out years later after launching an investigation. Now the woman has been arrested, and she will appear in court on December 7.
The police claims that these points are worth more than $300,000, which is complete hogwash. While she may be guilty of something, claiming that 2,000,000 SkyBonus points are worth $300,000+ is insane.
Here’s the SkyBonus rewards chart, just to give you a sense of some of the redemption rates:
Just to give a concrete example, five Delta SkyClub single visit passes would retail for $295 ($59 each), and they’re charging 85,000 points for that. That means each point is worth ~0.0035 cents. Using that valuation, 2,000,000 points would be worth ~$7,000.
One could certainly argue that there are better uses of SkyBonus points, like a Delta One roundtrip ticket to anywhere Delta flies for 830,000 points. However, I don’t think that could realistically be valued at more than a couple of thousand dollars, given the capacity constraints. The way I see it, no matter how you slice it, 2,000,000 points aren’t worth more than $10,000, which is a far cry from $300,000.
So while she may be guilty, I think investigators need to work on their cent per mile math, or otherwise teach me the best ways to use SkyBonus points, because I must be missing something. 😉
Perhaps they mean 20 million points, or 200 million points, or something, as that’s the only way the value would start to get that high. For what it’s worth, companies enrolled in SkyBonus earn anywhere between one and 30 points per dollar spent, depending on the fare class, the city they’re flying out of, etc.
(Tip of the hat to @MattSoleyn)
@AlohaDaveKennedy , agree! better call Saul! i think most ffp claims points do not have value. and belong to the ffp company.
i.e. from ihg T&C section 12 https://www.ihg.com/content/us/en/customer-care/member-tc#points
Points have no value. IHG® Rewards Club points are not redeemable for cash or any other form of credit and have no value until presented for redemption in accordance with the terms and conditions of this Programme. Points have no fixed or ascertainable cash value....
@AlohaDaveKennedy , agree! better call Saul! i think most ffp claims points do not have value. and belong to the ffp company.
i.e. from ihg T&C section 12 https://www.ihg.com/content/us/en/customer-care/member-tc#points
Points have no value. IHG® Rewards Club points are not redeemable for cash or any other form of credit and have no value until presented for redemption in accordance with the terms and conditions of this Programme. Points have no fixed or ascertainable cash value. Members have no ownership interest in accrued points and accrued points do not constitute property of the members. Use of the word earn in marketing materials in relation to IHG® Rewards Club points shall mean collect and shall not infer that the points have any value until they are presented for redemption. Points may not be purchased or sold and are not transferable except as otherwise stated herein.
Gunter hit the nail on the head IMHO. The IRS would love to be able to tax travel and hotel points. So far, the airlines and hotels have demurred, saying that points are gratuities they extend to their best customers, with no ownership value. As soon as a court sets a value, the next step will be taxation of travel hackers.
The scary part about this is that if found guilty in this as in the case of Senator Menendez, points now will have been proven to have a value in court, meaning that the government may try to tax them...
Does the IRS have any interest in this case? Billions of dollars worth of purchases/transaction happen every year that go untaxed. Wouldn't they just love to have a court attach a monetary value to points?
@mjolnir22 - no joke, if I were the defense attorney I think Ben would be a very good expert witness for valuation.
@lucky, probably worth figuring out your day rate for your services so when that call comes in you're ready!
The defense calls Mr. Lucky as an expert witness regarding the valuation of Delta Skybonus Points
The only question here is restitution. What is the cost to buy those missing miles or points? That’s the real value in a case like this.
This lady can get much better advice on how to save her a.. in this blog than by hiring any attorney. :) Lucky: you could help her.
Depending on how she accessed the miles, they would probably have more luck going after her for wire fraud. Especially if the defense argues the company didn't own the miles in the first place.
@Brandon, interesting argument. I can almost see that working under an expectation warped restitution theory.
Haha, I'd like to see them argue this one in court.
@Brandon - Damages are for civil suits. This woman has far bigger problems, as she's facing criminal charges, meaning possible jail time.
*missing
Misusing is nissing an S in the title
@Lucky, just a quick note on the math. They're charging 85,000 for five (5) single visit passes, in dollars that would be worth 5*$59 = $295. Using that exchange rate, 2,000,000 SkyBonus points is worth approximately $7K. Still way, WAY off from the police's alleged $300K. That is crazy!
@ John -- Good catch, thank you! Post updated to reflect that.
@AlohaDaveKennedy I agree, that's a very good legal point. If it has no value and is not the property of the company that claims being defrauded, there's going to be a very interesting debate there.
@Lucky, if you get developments, please report on them!
Crazy how they go after her but not the bankers who screwed the US out of billions during the financial collapse l.
The argument has to be that $300k of paid travel was the only way to *earn* the number of points she accumulated, and so she stole something that cost her employer $300k, even if that thing itself has a value far less.
I think you're right, Lucky, that it's BS to claim they have such a high value. Doubt she'll owe damages over $5k.
I don't get this either. So she booked trips and accrued personal miles, but it sounds like double-dipping is allowed...?
@ Jim -- The SkyBonus points belonged to the company and not to her, which is why it's an issue. This wasn't her personal SkyMiles account, but rather Brookstone's SkyBonus account, at least based on this article.
Given Delta's declaration that "Miles are not the property of any member," what exactly was stolen? How does one misappropriate company property the company does not own? If the property actually belongs to Delta, how can you value property that no set value? Can Delta produce any evidence of value, such as a published awards table? This poor New Hampshire woman had better call Saul for false arrest.
https://www.delta.com/content/dam/delta-www/pdfs/skymiles/SM_MemGuide.pdf
Given Delta's declaration that "Miles are not the property of any member," what exactly was stolen? How does one misappropriate company property the company does not own? If the property actually belongs to Delta, how can you value property that no set value? Can Delta produce any evidence of value, such as a published awards table? This poor New Hampshire woman had better call Saul for false arrest.
https://www.delta.com/content/dam/delta-www/pdfs/skymiles/SM_MemGuide.pdf
@ AlohaDaveKennedy -- An interesting/valid point!