What to Do When Rewards Programs Misbehave

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Today, TPG Senior Points & Miles Correspondent Jason Steele examines one reader's troubles with changes made to her loyalty program, and explains how to handle a similar situation if it should happen to you.

The landscape of travel rewards and loyalty programs is constantly changing. In the past year we've seen the end of lucrative benefits like the Bonus Award Night from Club Carlson and the 7% annual dividend from the Chase Sapphire Preferred Card. Conversely, we've seen positive changes like the new airline transfer partners added by Citi ThankYou Rewards, and the change in AAdvantage routing rules that will make it slightly easier to reach Australia.

Sometimes these changes take place slowly and incrementally, but other times changes take place seemingly overnight, leaving frustrated members (and their devalued points and miles) in the wake. In this post, I want to look at an example of how changes can be implemented poorly, and discuss what recourse award travelers have when rewards, benefits or even entire loyalty programs change without sufficient notice.

A TPG Reader's Story

What happens when the award you've been saving for disappears? Recently, we received a letter from TPG reader Karla, who had been saving her points for a new computer, only to find out that the award she had in mind was no longer offered, and furthermore that her entire loyalty program was being dismantled:

I've had the Bank of America Elite Rewards Visa since 2001, and had whatever card rolled into the program before that. After years of saving up points, I had enough for a new MacBook, or so I thought.

Last Thursday, I got a letter saying Bank of America is ending the Elite Rewards program. I checked online and saw that there were still several laptops to choose from. However, when I logged on the next morning to place my order, not only were the laptops gone, but all other Apple products had been removed as well. Furthermore, the gift card section had been gutted, so I couldn't use Best Buy gift cards as a backup option. I noticed several other premium items were also no longer available.

The Bank of America rep I spoke with was pleasant and apologetic, but told me that Elite Rewards is a separate company and that BofA has no say over what rewards the program provides. However, I later spoke with a supervisor at Elite Rewards, who told me that while they are a separate company, BofA selects the merchandise, and BofA made the decision to pull items. She and her coworkers were "shocked" and "surprised" at how much merchandise was pulled from the website that Friday morning.

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It's one thing for Bank of America to fold the program and put an expiration date on the points, but to simultaneously eliminate the premium items from the rewards inventory is a slap in the face. I've had that card for more than two decades, and have used it to make hundreds of thousands of dollars worth of purchases so I could get a "free" laptop, among other things. I can't be the only Elite Rewards customer feeling stung. Will I transfer to the new Preferred Rewards program this Fall? Let's just say other suitors are looking more attractive.

I think Karla's assessment is spot-on. Loyalty programs will inevitably change over time, but when those changes are made in a way that undermines the good faith of customers, then the loyalty is really only flowing in one direction.

What's Going on with Bank of America?

In the interest of helping out a reader, and knowing that many others are likely affected by this change, I contacted Bank of America to find out more. A member of the media relations team explained to me that the Elite Rewards program is run by a separate company, and that this program was tied to the Elite Rewards credit card, which is no longer offered. Furthermore, that card was the only one associated with this particular rewards program.

Bank of America notified its Elite Rewards credit card customers that the program would be ending, and that it will be replaced with the Bank of America Rewards program (associated with the Bank of America® Travel Rewards credit card and others). Unfortunately, some members were caught off guard when redemption opportunities like MacBooks and Best Buy gift cards were removed well before the program itself was retired.

Thankfully, my BofA contact took interest in Karla's plight and agreed to look into the matter. A few days later, Karla followed up:

I just got off the phone with a rep from Elite Rewards. Management asked her to reach out and see what she could do to resolve my problem. The order has been placed, and I should have my new MacBook soon.

The rep had no explanation for the change of heart, but I assume it's because you started nosing around. So thank you, and I hope Elite Rewards chooses to do the right thing for all their customers.

Again, I fully agree with Karla's sentiments. Unfortunately, the TPG team can't advocate for every reader on a personal level. While I'm happy we were able to help Karla resolve this situation, it's really on Bank of America and Elite Rewards (and all loyalty programs) to do the right thing for their customers. Call me crazy, but the focus of a loyalty program should be to engender and reward loyalty, which doesn't appear to have been the goal here.

This case is somewhat unusual, as it involves a credit card that was co-branded with a stand-alone rewards program (not with a retailer or travel provider). However, it's similar to what we witnessed as Barclaycard ended its relationship with US Airways Dividend Miles earlier this year. Unlike Bank of America, Barclaycard did an excellent job of keeping its customers informed and giving them options throughout the process. As the Dividend Miles program disappeared, existing cardholders were offered several different flavors of AAdvantage Aviator cards, and plenty of notice was given before benefits were removed.

What to Do When Programs Change Suddenly

I research credit card rewards all day long, and I find that reward programs are constantly changing. Sometimes the changes come with little notice, but customers might also easily overlook notices amidst the sea of marketing material that arrives both by email and by post.

If you're faced with one of these transitions, you have several options:

1. Go with the flow — In many cases, the changes are for the better even if there are some short-term growing pains. Bank of America makes a good case that its Bank of America Rewards program offers superior value to customers, since they can now redeem points for cash, travel, gift cards and other rewards instead of just the limited selection of merchandise available in the old Elite Rewards program. I've read other reports from customers who were dissatisfied with Elite Rewards, so I think cardholders like Karla may eventually be more satisfied by the Bank of America Rewards program. Furthermore, this program is also eligible to receive the Preferred Rewards relationship bonus for those who also hold other accounts with Bank of America.

2. Redeem early — Most of the time, changes to reward programs are made far enough in advance that you have time to redeem your points or miles at the old rate. For example, American Express has already announced that it will reduce the transfer ratio of Membership Rewards points to British Airways Avios from 1:1 to 5:4, effective October 1, 2015. While no one will be happy with this change, Amex deserves credit for informing customers several months in advance, giving them plenty of time to transfer before the new ratio goes into effect.

3. Ask for what you want — If you find yourself (like Karla) in a situation where you feel like a program is genuinely doing you a disservice, it never hurts to take it up with a representative or supervisor (or several of them). Some avenues of communication are more effective than others, so try social media and email if you're not making headway by phone. You may even consider escalating egregious loyalty program fouls to folks higher up in the company. As always, be polite and reasonable. There's no promise your efforts will pay off, but I've seen plenty of issues resolved in favor of persistent customers who have a legitimate complaint.

4. Move on — If you've done what you can to rectify a bad situation, but you're not gaining any traction, then it may be time to switch loyalty programs. Americans are fortunate to enjoy an extremely competitive credit card market, especially when it comes to rewards cards. There are plenty of other card issuers who would be happy to have your business. I advocate letting your former issuer know exactly why you decided to switch, because it gives them one last opportunity to make things right.

What's your strategy for when loyalty programs become disloyal?