The Engineer Who Bought Over 12,100 Cups Of Pudding to Earn 1.25 Million Air Miles

Karl Smallwood 64
puddingAir Miles are awesome, they can be used to score free flights, hotel stays and if you’re really lucky, the scorn and hatred of everyone you come in contact with who has to pay full price when they travel. The king of all virtually free travelers is one David Phillips, a civil engineer who teaches at the University of California, Davis.

David came to the attention of the wider media when he managed to convert about 12,150 cups of Healthy Choice chocolate pudding into over a million Air Miles. Ever since, David and his entire family have been travelling the world for next to nothing.

So how did he do it? Well, first we need to explain the kind of man David Phillips is; he’s the kind of guy who reads every inch of the small print on things. The kind of guy who learned to count cards just so he’d never get ripped off in a casino. In fact, Phillips stated that he could have probably been a pro card player if it wasn’t for the cigarette smoke. Yes, this guy- according to him- could have been a millionaire card player, but he enjoyed fresh air more than the musky stink of success.

His most famous endevour was back in 1999 when he saw that Healthy Choice was having a promotion on their frozen entrées section. The offer was as follows: for every 10 bar codes of their product a person sent in, they’d be awarded  500 Air Miles. However, the company had an early bird stipulation that people who redeemed the offer within the first month of the competition would receive double that, meaning a person could potentially receive 1000 Air Miles for buying just 10 of their entrées.

Upon catching wind of the deal, David scoured his local supermarkets to see which, if any products offered the best potential return. After some legwork, he found what he was looking for- a discount grocery chain that was selling individual chocolate pudding cups for 25 cents each. This meant that for a measly $2.50, he could get 1000 Air Miles.

Realising the amazing return he was potentially able to receive, David set out to hit every store in the chain in one day and buy up every single Healthy Choice pudding they had.

Now, you’re probably thinking a guy walking into several stores and asking to purchase all the Healthy Choice pudding they possessed, even in the back of the store, would arouse suspicion; and if anyone cottoned on to what he was doing, they’d try to get in on it too, because, why wouldn’t they? David apparently had the same concern and while buying the pudding, he told people he was doing it because he was stocking up for Y2K, which was just around the corner.

All in all, David spent just over $3000 on pudding, which may seem like a lot, until you realise the total dollar value of the miles he was set to receive was in excess of $150,000. However, before that, he actually had to send off all of the bar codes.

According to David, his wife got blisters from peeling off hundreds of stickers and his kids and co-workers grew physically sick of the sheer amount of chocolate paste he was forcing on them.  Further, it began to look doubtful they’d be able to peel off all the barcodes in time to qualify for the early bird part of the promotion.

This is when David had another idea- why did he need to have his wife and children suffer when he could get others to do the leg work for him?

David approached the local Salvation Army with an offer; if they gave him a bunch of volunteers to peel off all the bar codes on his pudding, he’d donate the pudding to them. But here’s the beautiful part, doing this counted as a considerable charitable donation, which let David claim just over $800 back in tax deductions at the end of they year.

But the benefits of David’s scheme didn’t end there. After sending off the bar codes and getting back his 1,280,000 miles, (he got a few more than just from the pudding because he also bought some soup at 90 cents a can before he realised that was the sucker’s method),  he now officially had over a million miles in his frequent flyer accounts, which automatically gave him lifelong access to something called the “American Airlines AAdvantage Gold club” giving him and his family a number of awesome flying related perks for the rest of their lives.

But we haven’t even got to the best part yet. David will likely never run out of Air Miles because he’s still earning miles at about 5 times faster than he’s spending them, despite traveling  quite often, thanks to various frequent flyer incentive programs he keeps an eye out for and exploits just like the pudding scheme. Today, he has over 4 million miles in his various accounts and has flown to over 20 countries and taken numerous vacations in the meantime.

In the end, for a one time cost of a little over $3000 (or less if you subtract the tax deduction), and a few other similar deals he’s taken advantage of to bolster his numbers, David never has to pay for a flight in his life ever again. Genius.

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64 Comments »

  1. melat3mg September 18, 2013 at 7:25 am - Reply

    How can you write a story about this and not even hint at the reference in “Punch Drunk Love”??

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 9:51 am - Reply

      @melat3mg: I once read a thing that said something to the effect of “If you mention everything in an article, you’ll leave nothing for people to comment about below the article.” I guess maybe that’s true. ;-) In truth, I’ve not seen the film, though I don’t know if Karl has. Thanks for adding that in these comments. :-)

    • Ingrate September 18, 2013 at 1:21 pm - Reply

      Exactly!

    • bev September 18, 2013 at 7:29 pm - Reply

      http://en.wikipedia.org/wiki/David_Phillips_(entrepreneur)

      “Phillips’ pudding story received international attention from news outlets such as The Wall Street Journal and The Times. The story was re-created in the 2002 Paul Thomas Anderson feature film Punch-Drunk Love.”

      • Karl Smallwood September 20, 2013 at 5:51 am - Reply

        I’d like to say I left it out because it wasn’t interesting or I wanted to cram in a bunch of other facts, but the truth is I’ve never seen the film it never occured to me to mention it.

        Most of the sources I used were from before the film was released, so none of them made reference to it.

        Which is a shame because so many people seem annoyed I didn’t include it.

        Hope that clears it up for everyone.

  2. Wilson September 18, 2013 at 7:33 am - Reply

    Wouldn’t he still need to pay for airport taxes?

    • Bob Ross September 20, 2013 at 6:35 pm - Reply

      Wilson, I bet you are a blast a parties.

      Where do you go when the lights go out?

  3. Dan September 18, 2013 at 7:46 am - Reply

    How you never mention Punch Drunk Love baffles me.

  4. Kevin September 18, 2013 at 8:10 am - Reply

    Surprised you didn’t mention this is partly illustrated in the film Punch-Drunk Love, which is pretty underrated.

    • hutch September 18, 2013 at 8:24 am - Reply

      whenever i watch Punch Drunk Love – i always wonder if this is plausible. i guess so. pretty fascinating. and envious that i didn’t do it

  5. Chase D September 18, 2013 at 8:18 am - Reply

    I believe a “tax deduction” is a deduction on your taxable income. So, if he got an $800 tax deduction and if at his top end he’s at 25% tax bracket, he’s only getting back $200.

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 11:17 am - Reply

      @Chase D: Correct, fixed. And for the record, that was my mistake, not Karl’s. This is why I shouldn’t edit articles at 2am. ;-)

  6. Ryan September 18, 2013 at 8:44 am - Reply

    Wasn’t this one of the plot lines of one of the best, most underrated films ever… Punchdrunk Love?

  7. George Mezori September 18, 2013 at 8:56 am - Reply

    This guy is pretty clever. Especially the Salvation Army deal.

  8. Andi September 18, 2013 at 8:59 am - Reply

    Crucial error in your article: An air mile is worth 1-2 centa, not 10. 1.2 million air miles are worth between USD12,500-25,000, certainly not 125,000 dollars. Thus, the guy earned a good 15k by spending 3k and a tremendous amount of time. Not shabby but also not the most brilliant scheme ever.

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 11:23 am - Reply

      @Andi: The 2 cents per mile is what it cost Healthy Choice to payout those miles to David, but doesn’t it depend completely on the airline and promotions they run; which you select- business vs. economy class; etc. in terms of how much the net dollar value is worth? Some of the numbers are crunched on this site (not to do with this particular thing, but just airline points systems in general) and he comes up with the number of anywhere from .4 cents to 11 cents per mile, depending on options chosen. At the low end, that would be $5K worth, as you say, not much of a deal. At the high end, that would be $137,500. Given David’s apparently particularly frugal and savvy about these sorts of things and probably is hitting more towards the high end when he uses miles, I’m comfortable with Karl’s estimates in the article.

      • Karl Smallwood September 20, 2013 at 5:47 am - Reply

        To add to what Daven said. I decided to note the upper limit of the points potential worth to highlight how much of a good deal he got for this article.

        It’s a little on the high end, but given the fluid nature of their value and David tendency to squeeze every penny, it’s a plausible, albeit quite high figure.

        Thanks for reading.

  9. Kimster September 18, 2013 at 9:26 am - Reply

    Well played sir!

  10. Bruce Fancher September 18, 2013 at 11:24 am - Reply

    Mmmmm. Pudding.

  11. Grant September 18, 2013 at 1:11 pm - Reply

    No way they’re worth over $100,000… check and see what you can redeem miles for now days. It’s about 10,000 miles = 100 dollars. They’re worth 1-2 cents…

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 1:57 pm - Reply

      @Grant: See reply to Andi

      • Ron September 22, 2013 at 11:50 pm - Reply

        @ David – unless you redeem for flights in First class, you’re not going to get anywhere near 5-10c per point value. And IF you do, those points evaporate in a hurry – 1.25MM is nothing. I’ve got >4MM this year alone, and have redeemed 1.5MM – for a trip to Paris, a trip to Thailand and a trip to Johannesburg – all in Biz/F.

        Common value for the “average” airline point is around 2c each.

        • Andy Shuman September 23, 2013 at 10:53 am - Reply

          First, there is an exaggeration from the author overstating the value of miles. Now, we’re witnessing another extreme — severe understating. Ron, first of all, Singapore suite costs a million miles only at the highest redemption rate, and no one — let me repeat this — no one, should book Singapore or any other airline for that matter at the full award rate. This is a travesty in frequent flyer circles, and you should know this since you’re one, too :-). Singapore saver award costs around 220K between Asia and North America or around 180K between Asia and Europe.

          Second, why do you have to take the most expensive redemption to illustrate your point? First class in the Cathay Pacific suite, which is absolutely fantastic, only costs 135K miles RT in saver, and the availability is usually quite good. Please don’t take it the wrong way, but the fact that you’ve spent over 1.5M miles on three (!) flights tells me that you just took the first redemption rate the airline threw at you. You should’ve done some due diligence and learned how to manage your miles more efficiently.

          Here is my example. Similar to you, I’ve also booked premium class flights to Paris and SEA.
          This is what I’ve spent: JFK-Paris, business class on Delta and Air France (return): 100K miles. JFK- Siem Rip and Phuket-JFK in first class suites on Asiana and Cathay Pacific: 135K miles. And even though I’ve never been to South Africa, a business class from the US to JBN can be had for mere 120K miles.

          Of course, it depends what miles you have in your stash. United and Star are the best, American and One World are decent, Delta and SkyMiles (aka Sky Pesos) are the worst.

          If you have questions ask me, or just go to Flyertalk or some blogs and learn how NOT to waste your miles on lousy redemptions. Since you still have a lot of miles in your account, they should last you for years not just a few flights.

          • Daven Hiskey
            Daven Hiskey September 23, 2013 at 2:39 pm -

            @Andy Shuman: I’m learning an amazing amount about airline rewards programs in this comment thread. :-)

  12. borky bork September 18, 2013 at 2:40 pm - Reply

    1.2 million frequent flier miles are not worth $150,000. A more realistic conversion is: 1 mile = 1 cent. At this rate, his miles are worth $12,000.

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 2:53 pm - Reply

      @boryk bork: See reply to Andi.

  13. m September 18, 2013 at 3:14 pm - Reply

    Great, so this guy will now cause the airlines to repeal all frequent flier programs due to his abuse lol!

  14. Mike September 18, 2013 at 5:18 pm - Reply

    I’m sorry and I feel kinda bad saying this, but all these comments about not mentioning “Punch-Drunk Love” are right. As a journalist, you should be able to reference the wider culture in which a story sits in order to be able to contextualise it.

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 8:35 pm - Reply

      @Mike: While there are some journalists who work here, that’s not really the style of article we do per se, and if we included every little detail of every story here, each article would be many, many thousands of words long, which I know from a huge sample size of site metrics that exceptionally few are interested in.
      .
      We basically try to root out the most interesting, relevant bits on a story highlighted in the title. We’ll sometimes put the slightly less interesting bits in “Bonus Facts”, if they are interesting enough, but if an articles is already getting a tad long on the word-count side of things, then we might not even do that. If a side-bit is interesting enough, it might get its own full article, so long as there is enough there to not overlap too much with the existing article.

  15. Patrick September 18, 2013 at 5:31 pm - Reply

    Earning 1 million United miles is my hobby, because I have limited cash budget for traveling. It is not illegal or unethical. If you are interested, see my blog for my experience.

    To start with for one person:
    Chase Sapphire Preferred card = 40,000 miles
    Chase Freedom card = 10,000 miles
    Chase United card = 55,000 miles

    *One round-trip ticket between US and Europe/Asia is about 65000 united miles

  16. dabble53 September 18, 2013 at 5:36 pm - Reply

    American has (relatively) recently changed their “lifetime” award levels. You now have to actually fly the million miles to get the lifetime award. Bonus miles (what you get when you purchase things or fly in business/first) do not count any more.
    Being only 200,000 miles from what would have been lifetime platinum, I found this change quite disheartening….and basically don’t fly AA any more. I’ve almost used up the 1,000,000+ miles I had in my account.

  17. Joe September 18, 2013 at 6:14 pm - Reply

    No tax deduction should be taken for the pudding given to the Salvation Army. The organization removed the stickers for him. Consequently he received something in return and, by definition, was not a true charitable donation.

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 8:27 pm - Reply

      @Joe: The IRS must have accepted it or he wouldn’t have been so keen on telling that part in interviews. Perhaps that is why it was only $800-ish deduction, though, instead of the full price of the donated items?

  18. Peter September 18, 2013 at 8:02 pm - Reply

    1. To all those people who said this was in reference to Punch Drunk Love, this story happened in 1999 before Punch Drunk Love was even aired as a movie (2002)

    2. This site just recycled a story that is over a decade old

    Source: http://www.snopes.com/business/deals/pudding.asp

    • Daven Hiskey
      Daven Hiskey September 18, 2013 at 8:26 pm - Reply

      @Peter: Even when Snopes covered it was old… Nearly every interesting fact ever is old (and usually the older the better as far as people’s interest goes, as then more people have forgotten about it). Of course, if the interesting fact happened today or something, then it’s just news, which isn’t really what we do here. ;-)

    • TJ September 19, 2013 at 1:17 pm - Reply

      (SIGH / FACEPALM)
      You’re not all that quick there, guy.

  19. Angela September 18, 2013 at 8:31 pm - Reply

    Please donate your air miles to Make A Wish and help kids dreams come true.

    “Nationally, Make-A-Wish® would need more than 2.5 billion miles, or 50,000 round-trip tickets, to cover every travel wish each year.

    “Every mile donated helps wish kids and their families travel to destinations around the world. Once donated, your miles will never expire and are used to support wishes across the country. This is just one simple way you can help grant a life-changing wish experience.”
    -Wish.org

  20. Schraderbrau Beer September 19, 2013 at 2:04 pm - Reply

    This is more common than you think. Check out Flyertalk or FatWallet for similar “schemes.” Although not really a scheme. It’s just following the rules. Good deal.

  21. Douglasc September 20, 2013 at 1:38 pm - Reply

    Can’t believe they would make the film Punch Drunk Love and NOT mention this article.

  22. Isaiah Sheogorath September 20, 2013 at 5:42 pm - Reply

    Using the Salvation Army because he’s cheap? This guy sounds like he should be flayed and spit roasted for eternity for his crimes, not seen as brilliant.

    The world’s filled with the filthy corrupt like this, who get away for their despicable acts because people love taking advantage of others, and hearing of the sick success of others in this manner. It makes me, for one, sick to my stomach, amd wrenches the good will towards you from my heart.

    The USA is laughable, and laughing is what I’ll be doing when the flames of Hell reach up from the nether to consume its wretched denizens, including all these commentors here. When you see the crookedness of the path on which you drive your chariots of wickedness, then you may see the path to righteousness doesn’t lie far away. In the mean time, suffer in your many worldly ways, and do not ask why so much pain and suffering inflicts your contemptible hordes.

    • qwerty October 29, 2013 at 7:06 am - Reply

      The Salvation Army got nearly $3000 worth of food in lieu of a few hours of time from their volunteers. $3000 for say 3 or 4 days work is way more than most jobs pay, so I guess they got a good deal.

      That’s a whole lot of food donated to the SA for poor folk. Everyone was a winner here.

      Note – these were Salvation Army volunteers doing the work (not actual defenseless poor/homeless folk). These volunteers donate their free time doing activities to help the Salvation Army raise resources. They probably raised more from this one simple activity than they raise from most other activities or campaigns.

  23. Andy Shuman September 21, 2013 at 1:29 pm - Reply

    David, the truth is that in order to get even close to CONSISTENTLY getting this kind of value out of an FF mile, one would have to fly first class INTERNATIONALLY on the most expensive and luxurious carriers in the world ALL THE TIME. And not just internationally, because flights to Europe or Latin America won’t yield as much, but to Asia, Africa and Australia. Not that it’s not a terrific deal, but very few people would really get this value consistently out of their redemptions.

    On a related note, just imagining how much work it took for him to get all these riches makes me shake my head in disagreement. Especially since every American with good credit has a quick and easy access to this kind of frequent mile dough.

  24. Ron September 22, 2013 at 11:44 pm - Reply

    This story is ridiculously absurd. 1.25MM points may get you a few round trips to Australia/Asia/Europe in First class, but the notion are enough for a “lifetime” of airflights is beyond ignorant nonsense.

    Just one “suites” class flight on Singapore Airways will run you 1MM points – for one person.

    And FYI, the guy paid a fortune for those “free” tickets. You can earn a lot more points today for much less out of pocket $.

  25. George K September 25, 2013 at 7:44 pm - Reply

    These articles are making me HUNGRY!

  26. Yer Pal May 7, 2014 at 3:51 am - Reply

    Man, you Americans got it easy. In Canada I get 1 stinkin’ Airmile for every $20 of groceries I buy. As a single guy, I don’t buy a lot of food at once. So my grocery bill is usually $39.99. One frickin’ point! I’ve had my Airmiles card for YEARS & lucky if I have maybe 60 Airmiles points. What a rip! Canadians always get the shitty end of the stick. As usual.

  27. Andy Shuman @ Lazy Travelers May 7, 2014 at 10:22 am - Reply

    True, but Canada and the UK are still ahead the rest of the world in this regard. You guys do have access to some really good credit card deals. Flyertalk has a dedicated thread, so you could check it from time to time.

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