Pingreeman's post Re: Points about points linked to InsideFlyer.com where I stumbled upon a fascinating article* about Frequent Travel Programs. The article references Marriott Rewards twice, for convenience, I've included the excerpts, below. Based upon legal precedent, a 'grandfathering' approach is overly optimistic. I think we Elites thrive on a good challenge, we'll just have to innovate. Comments invited:
MYTH: Frequent traveler programs are being phased out.
TRUTH: Frequent traveler programs are here to stay. Period.
"occasional reductions in reward levels doesn’t mean a program is headed for the scrap heap. Marriott, for example, recently trimmed its trailblazing frequent guest program. But the less-lucrative reward levels were simply a matter of “gaining a balance of cost and control,” says Ralph Giannola, Marriott’s vice president of business development"
MYTH: Frequent travelers do not have rights.
TRUTH: This is America. Of course you have rights. But as is the case with all your other God-given rights, you’d better be prepared to go to court and pay the price of suing to protect them.
"In a class-action lawsuit filed in March 1987, members of United’s Mileage Plus took on the nation’s largest carrier. United had increased some award levels in January of that year, but then, after a public outcry, rescinded the increases six months later. Mileage Plus members who had claimed their awards at the higher award levels demanded the return of the excess miles they had to use. When United refused, the award winners sued. More than a year later, United relented and returned the excess miles to the Mileage Plus members in an out-of-court settlement.
However, before spending thousands of dollars pursuing lawsuits, remember that the lady with the scales is blindfolded: the courts might rule for the airlines. That’s essentially what happened to the consumer protection guidelines issued by NAAG. The organization’s code would have required frequent travel programs to meet certain stringent conditions – such as honoring a reward request within fifteen days before or after you originally wanted to travel – or be subject to prosecution under consumer protection laws.
NAAG did have some early successes – it won a ruling against the OnePass program and laid the groundwork for successful action in Pennsylvania against Marriott’s Most Honored Guest program – before the organization was stymied by a federal court injunction. Currently it is prohibited from enforcing any consumer protection guidelines relating to the advertising and marketing practices of the travel industry. That ban includes frequent travel programs."
Let's not forget the tax issue: in the background all these years since these programs began is the implied threat that frequent flier and stay programs provide a taxable benefit to the member, one that should or could be taxed. Most companies have not voluntarily released their member information to the IRS, thankfully. Given the tax tone in Washington now this may change.
Marriott Rewards terms and conditions address this issue: in essence saying it is the responsibilty of the member to pay any taxes.
Good point. The tax issue is not ignored but addressed in the article* It is a good subject for a different post ;-) In theory, "grandfathering" is a wonderful concept and a suggestion that more than one person advanced here. To think that Marriott would attempt anything resembling 'grandfathering' given the lessons learned is overly optimistic. We know that Marriott is listening, and I am hopeful about a solution. Based upon the legal risks, it's highly unlikely that the 'fix' will take the form of "grandfathering."
Having just written a large check to the IRS and the CA FTB my mood and opinions may be skewed, but the issue of taxing perks has been on the table for a long time, having bubbled to the surface when American started this all in the early 1980s.
Rationale for taxing can be found in a little-known part of recent legislation concerning the deductability of mortgage interest for folks in the over 250K AGI bracket.Sacred cows do make the best burgers when a perk is out there untaxed. Most Americans who don't travel as much as us, and therefore have given this little thought. But our elected representatives are always hard a work, tweaking the tax laws.
Yes, another thread might be more appropriate, but the issue is boiling at the moment in the Halls of Congress and among board rooms across this vast land.