Randy says he told you so.
I Told You So
It’s good to see the new leadership role American AAdvantage is taking in creating a channel for third-party enterprises like AwardWallet to offer unique services for members of frequent flyer programs. Against a din of noise when Southwest, American, Delta and United offered up concerns about these “screen scrapers”, I pointed out a logical solution and what I thought were the correct concerns of the loyalty programs involved—security of their members’ data.
Of course, a peanut gallery of bloggers and FFP members sprung forth and thought it was no such thing, but was rather a move similar to ancillary revenue like checked luggage. Sorry guys, that just doesn’t seem to be the case because the recent agreement with American Airlines is for roughly $5,000 annually for the API feed of data.
Really, does $5,000 sound like a revenue play? Looking at the bankruptcy papers for the airline and the subsequent merger costs, that’s like two minutes of legal fees and perhaps only lunch money for the tech staff that deals with building unique APIs. I find it a quite reasonable annual fee, and likely less than the cost of what AwardWallet was spending on screen scraping for AAdvantage accounts.
By vetting third parties such as AwardWallet on a contractual basis, it will certainly lead to a stable industry of more trusted resources. The entry barrier for screen scrapers was simply too low and as such the issue of data security has been hovering for years. I urge all other programs to adopt a similar approach to these third parties and find ways to honor their members’ interest in these types of services.
Though, actually, I see something else on the horizon. I think loyalty programs should consider investing in or acquiring (much like United MileagePlus has done with Rocketmiles) some of these types of services and embed the tools, such as alerts and other member-friendly benefits, into their own databases.
From where I sit, it’s really foolish for airlines to look upon these third-party services as a nuisance. Rather, they should look to see what they are missing. And it is clear that they have missed the mark on what technology can do to increase, and in fact add to, the loyalty factor they have with their members. Just sayin’.
The funny thing that happened on the way to writing about the above and the goal for better control of data security for loyalty programs was the news that US Airways accounts were hacked and frequent flyer miles were missing.
Here the industry was worried about third parties and data security and they have their own internal problems. In this most recent situation, it seems that roughly 8,000 members of Dividend Miles had their accounts accessed and miles were coming up missing. This is not the first time, and in fact I can’t think of any airline or hotel loyalty program that over time has not had some sort of breach in its loyalty system.
Typically in the past, it has been internal hacking or via other known channels such as travel agents with direct access. In these situations a person or persons steal some membership data (account number and PIN) and then accesses the account to redeem miles that they likely advertised as an airline ticket on channels like eBay or craigslist—and then enjoy pocketing the money from the transaction. In the cases I’ve tracked over the years, they are invariably busted since it’s across state lines and the FBI gets involved and tracks down the communication (email, IP address, etc.) to identify the person. Because using the miles for air travel requires confirmed ID, the TSA is always a friend of fraud here.
Anyway, data security is a much needed top-of-mind concern for those who have any type of access to our miles—and let’s hold them to being responsible for it.
As a side note, this new agreement between American and AwardWallet is not the first in the industry. United and UsingMiles also have a contractual relationship that allows for some data to be used in account management by a third party.
And lastly ...
By now or in the next few days, you’ll start to hear about something called Premium Membership over at the Milepoint.com community of road warriors/frequent flyers. It sold out in three days last year as a package of preferred benefits and bonuses for the traveler and this year promises to be just as exciting. I know, I helped work on the project and it’s something no other website of travelers is doing. So you might want to make sure you are a Milepoint.com member—and I suggest you take a look at becoming a Premium Member. It will be worth your time.