David Phillips gamed Healthy Choice's per-UPC miles with cheap pudding cups

In 1999, ConAgra's Healthy Choice brand ran a promotion crediting airline frequent-flyer miles to anyone who mailed in UPC codes from Healthy Choice products, with a limited-time early-bird bonus in May 1999 doubling the standard rate to 1,000 miles for every 10 UPC codes submitted. The promotion's economics were built around a typical customer buying a normal mix of Healthy Choice frozen meals and other higher-priced items, each carrying its own UPC code toward the total, at prices generally running several dollars per item.

David Phillips, an engineer, noticed the promotion credited the same fixed mile reward per UPC code regardless of the underlying product's price, and that Healthy Choice's cheapest qualifying item — a $0.25 single-serving pudding cup, sold at discount grocery outlets — carried a UPC code worth exactly as many miles as a UPC code from a $5 frozen entrée. The promotion had been priced against an average shopping basket, leaving the cheapest possible qualifying purchase completely unaccounted for.

Bought 12,150 pudding cups at $0.26 each, had Salvation Army members peel UPCs for the donated pudding, and mailed codes per rules to turn $3,140 into 1.25 million miles.

The promotion credited miles per UPC code, not per dollar, so a $0.25 pudding cup earned the same as a $5 entrée.

Phillips bought thousands of the cheapest qualifying item, converting each dollar into far more miles than the designers modeled.

He solved the labor of peeling 12,150 codes by partnering with a charity, donating the pudding and getting a tax deduction.

Because he followed the written rules exactly, the company had no basis to refuse payment.

When pricing any per-unit reward, model the cheapest legitimate way to qualify, not the average purchase, or someone will exploit the gap.

Healthy Choice honored the promotion's terms in full, crediting Phillips 1,253,000 frequent-flyer miles — the majority to his American Airlines AAdvantage account, which also granted him lifetime AAdvantage Gold elite status, with the remainder split across United, Delta and Northwest accounts.