"Exploiting a loophole": what does this mean, and what are the implications

[RJ]

I think that the term loophole is actually a misnomer.

Definition of loophole - an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

Source: https://www.merriam-webster.com/dictionary/loophole

There's no legal obligation to pay a set price for a journey. The Conditions of Travel specifically allow the use of multiple tickets for a journey, gift a choice of routes and starting/stopping short, all of which impact on the price paid. Therefore finding a cheaper arrangement than the through fare to make your chosen journey isn't tantamount to use of a loophole.

It's more creative use of ticketing rules to maximise value from the fare paid. I refer to it as creative ticketing.

Don't be fooled into thinking it's only enthusiasts who are sharp customers. I have several regular customers who know about fares that undercut others. I can spot these anomalous fares a mile off. For example I have one who travels on HS1 and uses a ticket that is way cheaper than the price from London Terminals to Ashford, despite having extensions at both ends. But a ticket inspector would never pick up on it. Last time, I pointed it out to her and advised her under no circumstances to draw attention to that ticket or tell anyone about it! A similar situation exists for certain WCML travel and various other places where there are patterns of buggy pricing. I have many other customers that know of tricks to save on fares and they are not enthusiasts. I learn a lot from them and occasionally humour them about what they're doing if there's time.

The first posts asks about implications of using "loopholes." There can be serious consequences as businesses don't tend to like sharp customers and are seldom equipped to handle them. One of my pastimes is legally extracting value where possible and this extends well beyond the railways, where I've chosen to retire from the creative ticketing game. To give some examples, not many people go to the high street to make money rather than spend it, or go for years legitimately getting 90-100% off supermarket shopping, or get a £1 discount per litre of fuel, or accrue air miles on tax and NI deductions and so on. And that's a good thing as the economy would implode if everyone did that. The consequences of doing things that people simply don't understand (creative ticketing is one example) mean it sometimes isn't worth taking extra value. Being prolific in doing this means you eventually attract attention from senior people, policymakers in organisations. You may even attract unwanted attention from the authorities and totally stump people who don't get what you do, but can't quite fit your behaviour into their recognised models of nefarious activity - the BTP would be one example from the railways, but it gets far graver than that in other areas. It's not all bad however - sometimes surprising rewards and opportunities are offered as a result.

For an easy life, I recommend leaving the "loopholes" alone. But if you choose to live that life, you have to be prepared for those who don't understand that what you are doing is legitimate and have ways of communicating with them effectively.

 

[John @ home]

are there any train companies which are registered charities?

The world's oldest working railway is a charity registered in England. http://www.middletonrailway.org.uk/

 

[wellhouse]

RJ seems to hit the nail on the head;

Definition of loophole - an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

Source: https://www.merriam-webster.com/dictionary/loophoole

....I have one who travels on HS1 and uses a ticket that is way cheaper than the price from London Terminals to Ashford, despite having extensions at both ends. I...advised her under no circumstances to draw attention to that ticket...

Many businesses have complex pricing structures to secure the highest prices from customers prepared to pay them, while attracting further revenue from those willing only to pay less. For the Rail Industry, this is the crude distinction between 'Business' and 'Leisure' travel. There are, of course, further complexities of permitted routes.

Loopholes arise with unintended consequences of these complex pricing structures. If the advice is to not draw attention to particular use of a particular ticket for fear that the validity will be amended or withdrawn, then you have found a loophole.

 

[Dai Corner]

The moral values of those choices is an interesting topic for discussion... but on a completely different forum.

Agreed. I won't comment further on the moral factors here.

I wouldn't veer too far from that. But are there any train companies which are registered charities?

Many heritage railways are a complex mix of the private, charitable and in some cases public sectors. But I know you meant Train Operating Companies so I'll shut up before veering even more off topic and incurring the mods' displeasure!

 

[WelshBluebird]

Considering how expensive rail travel can be, and how some ToC's will go after passengers for even the slightest mistake, I have no problems at all with people exploiting loopholes. At the end of the day the rail industry themselves sets the rules on what is valid or not. So if, by the industries own rules, someone works out there is a "loophole", well good on them!

 

[AlterEgo]

To me, a loophole is where a “gap” in the rules allows someone to do something they would otherwise not normally be permitted to do, in accordance with the wishes of the rule-setter.

Reverse loopholes also exist, where the customer may lose out. There was a good example on here recently regarding a refund on a rover ticket following disruption.

 

[gordonthemoron]

With airline tickets, there are ways to get cheaper tickets too, e.g. Thai London-Bangkok-Hong Kong is cheaper than London-Bangkok and London-Hong Kong direct with other airlines, whether you break your journey or not. The only downside is transiting Bangkok airport can be a nightmare, esp first thing in the morning

 

[Silverdale]

The (partial) rover refund/compensation situation wasn't so a much a reverse loophole as a fog of complete uncertainty.

The essential feature of a loophole is that a rule allows behaviour that wasn't intended by the rule-setter. A rule-taker can "exploit" a loophole to gain a benefit versus what the rule-setter intended. Or they can be "caught out" by a loophole and suffer a loss versus what the rule-setter intended. A reverse loophole, if you like to think of it that way.

The customer travelling with a two together railcard and with both discounted tickets would be a better example of being "caught out" by a loophole (that because the second cardholder wasn't present, neither ticket was valid) The loophole allowed the train company to require the customer to purchase a new ticket. Or was that the intention of the rule-setter?

 

[Sirius]

I consider myself to “exploit a loophole” because comparing a number of negative easements there are some to prevent a circuitous route that are similar.

Considering the fare setter and circumstances that caused the situation to arise I think it is a clear oversight on the part of the TOC. I can’t think of no reason for the omission.

I consider that holding a perfectly valid ticket through the wizardry of the routing guide that is not intended to be valid a “loophole”.

I agree with wellhouse to some extent. If you believe that drawing attention would change rules then it’s likely a loophole.

 

[FenMan]

I consider myself to “exploit a loophole” because comparing a number of negative easements there are some to prevent a circuitous route that are similar.

Considering the fare setter and circumstances that caused the situation to arise I think it is a clear oversight on the part of the TOC. I can’t think of no reason for the omission.

I consider that holding a perfectly valid ticket through the wizardry of the routing guide that is not intended to be valid a “loophole”.

I agree with wellhouse to some extent. If you believe that drawing attention would change rules then it’s likely a loophole.

Putting on one side crazy loopholes that are obviously mistakes, I would posit that TOCs knowlingly create loopholes when premium pricing tickets to/from popular stations such as Woking and Reading. The TOCs are betting that a sufficient proportion of customers will buy their higher priced tickets to popular destinations such that the higher fare take easily outstrips "losses" incurred through a minority of more savvy travellers purchasing cheaper (and perfectly valid) alternative tickets.

 

[Silverdale]

If a TOC creates it knowingly, it's not a loophole.

 

[gingerheid]

Fascinating question! I'm thinking that the only other time we deal with an issue like this is the the question of tax avoidance, so perhaps our first warning sign that something is wrong is if we consider that our fare system is the next most complicated thing to our tax system!

In the old days we had the saying the tax evasion was illegal and tax avoidance was legal, and we could substitute the words "fare" into that. In recent times we've been trying to attack tax avoidance in much the same way as I guess talk of "exploiting a fare loophole" would try to tackle fare whateveryouwanttocalliting.

If we were to start doing that on the railways we would say that our reasoning was:

"It therefore rejects the approach taken by the Courts in a number of old cases to the effect that passengers are free to use their ingenuity to reduce their travel bills by any lawful means, however contrived those means might be and however far the travel consequences might differ from the real ticket." We would say that "Travel is not to be treated as a game where passengers can indulge in inventive schemes in order to eliminate or reduce their fare liability."

We would say that we wanted to tackle ticketing arrangements that were "Abusive", and this would have to be key to anything we did. We would say "The GAAR (General Anti-abuse Rule" only comes into operation when the course of action taken by the passenger aims to achieve a favourable fare result that whoever sets fares did not anticipate when it introduced the fare rules in question and, critically, where that course of action cannot reasonably be regarded as reasonable."

In order to show abusiveness we would have to show:
- contrived or abnormal steps in order to exploit a deficiency in the fares
- a fare significantly lower than the economic value of the ticket

I would suggest that split ticketing would be regarded as reasonable, because a reasonable person would think that the un-split ticket shouldn't be more expensive.

I would suggest that any journey involving passing through a station on a circular service twice wouldn't pass the test, and that any journey from the Midlands to the London area via Bristol and Portsmouth also wouldn't pass the test.

Of course we could and would argue this from now until the end of time, just like we do with the tax equivalent!

 

[Silverdale]

I think there is merit with the tax comparison, but you have to read across carefully.

I would suggest that any journey involving passing through a station on a circular service twice wouldn't pass the test, and that any journey from the Midlands to the London area via Bristol and Portsmouth also wouldn't pass the test.

Here, you are using the reasonable test in the now out of date sense of what might be a "reasonable route". Whereas in the tax analogy the question is not simply whether the tax paid was reasonable, but whether an unreasonable course of action was undertaken to achieve the favourable result.

So what course of action did the rail customer have to employ to purchase the ticket with an itinerary on a circular service? He laboriously searched through the available fares on offer on a retailer's website. Is this an inventive scheme? Contrived or abnormal steps?

I suggest that is not akin to creating a complex web of offshore companies which do no actual business, but function only to reduce a particular tax liability.

Also, would a reasonable person reasonably think that travelling for well over 3 hours on the circular route, unable to alight from the train anywhere but the station which had already been reached in 7 minutes, was an unreasonably favourable outcome? It might have to be explained to the reasonable person why any other person might remotely think it favourable at all.

 

[fowler9]

Not sure if they count as loopholes but when I used to regularly travel from Warrington Central to Liverpool South Parkway on a Monday morning it was cheaper to buy a single to Cressington. Also when I occasionally used to buy a return to get from West Allerton to Lime Street I would go to West Allerton and buy a return from South Parkway to Lime Street which again was cheaper. Both anomalies were told to me by staff in the relevant stations as they knew me as a regular and of course all round friendly chap.

 

[FenMan]

If a TOC creates it knowingly, it's not a loophole.

I don't agree. In some cases they are clearly placing a bet and having high confidence in the outcome. Some of the 'good value' tickets around my way have existed for years but any attempt to kill them off would lead to yet more anomalies. And so it would go on.

 

[Hadders]

Back in the day there were no evening peak restrictions on Great Northern tickets, only morning restrictions. Greedy First Capital Connect and DfT then introduced evening peak restrictions from London. Tickets from many other places remain unrestricted.

If a passenger uses an unrestricted ticket to circumvent the restrictions is this exploiting a loophole?
Is the train company/DfT really at fault for exploiting passengers with the imposition of the restrictions?

 

[ashworth]

Recently when making a return journey from the East Midlands to the South West I split my ticket at Cheltenham. This enabled me to return from my destination on a train departing one hour earlier at 0925 rather than having to wait until 10.25 for the off peak fare to be valid. By doing this I was able to leave an hour earlier paying £85 for my tickets rather than £203 and that was with a rail card. Is this perfectly legal combination of tickets exploiting a loophole or just sensibly avoiding XC’s extortionate fare for what was arguably a midweek off peak leisure journey.

 

[ForTheLoveOf]

Recently when making a return journey from the East Midlands to the South West I split my ticket at Cheltenham. This enabled me to return from my destination on a train departing one hour earlier at 0925 rather than having to wait until 10.25 for the off peak fare to be valid. By doing this I was able to leave an hour earlier paying £85 for my tickets rather than £203 and that was with a rail card. Is this perfectly legal combination of tickets exploiting a loophole or just sensibly avoiding XC’s extortionate fare for what was arguably a midweek off peak leisure journey.

Some would say you were exploiting a loophole, as you were making a journey that started before 09:30 and thus XC prices its tickets such that you are willing and able to pay full whack for this. Others would say there was still a bigger saving to be had (whilst still using legal tickets!), and that split ticketing is just scratching the surface!

 

[Dai Corner]

The more I read of this thread, the more I think that rather than loopholes there is a two-tier pricing structure; one for those in the know and another for everyone else.

 

[Bantamzen]

The more I read of this thread, the more I think that rather than loopholes there is a two-tier pricing structure; one for those in the know and another for everyone else.

Indeed, I have long been of this impression. Not that there is necessarily an issue with this, in all areas of life understanding what you are buying can often lead to things being a lot cheaper. Air travel is very similar, if you understand where various airline's hubs are you can make massive savings on flights requiring a change at one over direct flights (I've done this in the US saving up to $700 on one journey!). Obviously some companies try to build consumer applications to better interrogate systems to look for the best prices, but sometimes actually knowing how a system works is the best way as even the best developer is going to struggle to build algorithms for every possible scenario.

A good example for me quite recently, my mobile contract was up, and my smartphone suddenly bricked itself, and no matter what I tried it would not come back to life. Normally I would just have gone online, chosen a new phone & contract and left it at that. But I wanted a high end unit, so decided instead to go to one of the supplier's stores, to see what they looked like in person. Having chosen the phone, I sat down with the sales rep to sort out the contract & noticed on their system that when they came to the airtime plans, they were many more options than either their website or any competing one offered. So with a little bit of haggling I was able to get a far better contract, with a lot more data than I would ever have got online or had seen the plan screen.

Of course a once in two years or more purchase might warrant a bit of research and knowhow, with something like rail tickets the system really needs to be restructured & made fairer for all in the long run. Otherwise as "loopholes" or clever use of splitting become more widely know, TOCs will just quietly shut them down and absorb all the extra profits without passing any benefits on to all passengers.

 

[krus_aragon]

I know of a station "A" (a medium distance away) where the fare setter only offers a period return, but a more distant station "B", with a different fare setter, also offers a day return which undercuts the period return to the first station. The routeing guide shows that travel to B is valid via A, but as it's 15-25% slower it isn't shown by most travel planners unless you specify a via.

I consider this to be a loophole, and one that I'm happy to use. I don't feel that I'm being deceitful or underhanded in doing so, as I feel that I'm only under-travelling on a ticket to B because the appropriate ticket to A isn't offered for sale. (I feel the correct way of resolving this anomaly would be for the fare setter to A to introduce a day return ticket for that flow.)

 

[ForTheLoveOf]

I know of a station "A" (a medium distance away) where the fare setter only offers a period return, but a more distant station "B", with a different fare setter, also offers a day return which undercuts the period return to the first station. The routeing guide shows that travel to B is valid via A, but as it's 15-25% slower it isn't shown by most travel planners unless you specify a via.

I consider this to be a loophole, and one that I'm happy to use. I don't feel that I'm being deceitful or underhanded in doing so, as I feel that I'm only under-travelling on a ticket to B because the appropriate ticket to A isn't offered for sale. (I feel the correct way of resolving this anomaly would be for the fare setter to A to introduce a day return ticket for that flow.)

Day Returns of all types are generally being withdrawn, where they are not a regulated fare. It is an easy way to increase revenue (to meet ambitious DfT subsidy/premium targets) - many passengers (especially infrequent travellers) will not notice, and the TOCs can try to defend it by explaining that they are giving passengers additional rights. Of course, there are plenty of passengers who do not need those additional rights, and who would be quite satisfied having the reduced rights a Day Return offers!

 

[krus_aragon]

Day Returns of all types are generally being withdrawn, where they are not a regulated fare. It is an easy way to increase revenue (to meet ambitious DfT subsidy/premium targets) - many passengers (especially infrequent travellers) will not notice, and the TOCs can try to defend it by explaining that they are giving passengers additional rights. Of course, there are plenty of passengers who do not need those additional rights, and who would be quite satisfied having the reduced rights a Day Return offers!

Well, the flattening of the fares structure to offer a period return or day return, but not both, can create anomalies of its own (generally those that involve split ticketing).

The ticket flows I mentioned in my previous post look like a hangover from the days of everyone holidaying at the seaside, and have probably been forgotten about by their fare setter.

 

[ForTheLoveOf]

Well, the flattening of the fares structure to offer a period return or day return, but not both, can create anomalies of its own (generally those that involve split ticketing).

The ticket flows I mentioned in my previous post look like a hangover from the days of everyone holidaying at the seaside, and have probably been forgotten about by their fare setter.

Indeed, I often wonder what percentage of walkup flows have been materially changed since privatisation (other than the usual price increases). There must still be loads of flows out there which have the same features as the "dark old days". I am particularly intrigued as to the choice of who would set a fare (which would influence the pricing policy), and how this was decided, but there does not seem to be a great deal of information publicly available about this anywhere!

 

[Silverdale]

I don't agree. In some cases they are clearly placing a bet and having high confidence in the outcome. Some of the 'good value' tickets around my way have existed for years but any attempt to kill them off would lead to yet more anomalies. And so it would go on.

I wouldn't disagree that elements of the fares structure are based on the bet that many customers will be either too lazy to look, or so confused by the conditions on the offers they see if they do, that they will simply choose the first result a bog-standard journey planner throws up.

But that doesn't mean that someone choosing a cheaper ticket, with more restrictions and less validity is benefitting from a loophole. It's only a bona-fide loophole, by definition, if it allows something which the rule-setter didn't intend. If, as you say, the train company has constructed the fares knowingly, what they have allowed must be intentional.

Following on from this (#49) was the suggestion that there are two types of fare, expensive for those not in the know, and cheaper for those who are. That would be the case if some of the fares were kept a secret and only available to those with the confidential information. But all the rules and fares are published. It's not that some people are "in the know", it's that they have thought it worthwhile to look. What is true is that it takes time and effort to understand what validity is offered by each published fare, so there can be a considerable upfront cost to actually get the bargain fare which fits your needs at the lowest price.

But this is to wander into a discussion of shopping around to hunt for a bargain and the effects of complexity, and veering away from the subject of loopholes and whether the use allowed by a particular fare was what was intended by the rule/fare-setter.

Can we even know what was intended? When it comes to one fare undercutting another(#51) is it necessarily unintentional on the part of the fare-setter? You may say it obviously is because you have paid less than you would if the undercutting fare didn't exist. But fare-setters are competing with each other, so it could be completely intentional that one fare-setter has deliberately set the price if their day return to B, so as to undercut their competitor's period return to A, abstracting that day-returning flow to themselves and hiking their revenue.

 

[ashworth]

I wouldn't disagree that elements of the fares structure are based on the bet that many customers will be either too lazy to look, or so confused by the conditions on the offers they see if they do, that they will simply choose the first result a bog-standard journey planner throws up.

My 83 year old mother, who has never used the internet and probably never will, would either buy a standard priced ticket from the ticket office or decide not to bother travelling by train as the fare is too expensive. Fortunately, she doesn't do this as she would ask me to look online and find her something cheaper if possible. I think many people are confused by the terms and conditions, but I think a large majority of the general travelling public are, even if a bit more computer literate, in the same position my elderly mum regarding purchasing train tickets. I don't think people are too lazy to look but just that they don't realise what is available if they do look. I actually find the process of looking and trying to save a few pounds an interesting activity.

I've never actually found, or indeed used, any loopholes that have allowed me to travel from one end of the country to the other for a few pounds, but I do know of a few fare anomalies, including one local to me, which I use a few times each year which saves me quite a few pounds. The very fact that I always used to purchase it online and now get it from the TVM to avoid having to ask for it at the booking office or from the train conductor, perhaps suggests that it is a loophole that I am exploiting. I certainly wouldn't mention it in these forums, even privately, as doing so with another similar loophole a few years ago resulted in it very soon disappearing.

However, I'm probably now straying off what this thread is really intended to be about.

 

[PeterC]

It becomes a loophole when the TOC are trying to get rid of it.

 

[infobleep]

I've not knowingly exploited booking engine errors before but I have used the routing guide to my advantage, as well as split ticketing.

Sometines I see it as a game. The rail companies will do all they can to make money and using some spin to explain what they are doing is great and in turn some passengers do all they can to save money. I'm not adverse to rail companies make money. It's just the way the publicise what they do or dress it up.

For example it's not possible to get an advanced purchase ticket from Guildford to Hastings, even though it's possible to get one solely within the Great Western Railway network and it might be possible to do something similar on the Govia Thameslink Railway network under one of their brands.

Given this is the case I'd resort to split ticketing to get a cheaper ticket in advance or in this case, even on the day. The journey being made is off peak.

London North Western sell a lot of advanced purchase tickets or even tickets solely for use on their services from Euston. Are they exploiting a loophole that allows them to create TOC only fares? Was it the intention of the people creating the system that they could sell advanced purchase tickets from Euston in the evening peak?

 

[RJ]

The more I read of this thread, the more I think that rather than loopholes there is a two-tier pricing structure; one for those in the know and another for everyone else.

People have different tolerances for deal hunting. Many will only consider the first price they see and don't wish to or aren't able to expend any mental energy on getting that price down. Others will undertake light research or use automated tools to suggest cheaper fares and a tiny number will examine the system to a specialist level to get the most out of it.

You could argue that the fares should just be cheap without the need to hustle but the world does not work like that. The people willing to pay the market price subsidise those who aren't. The same goes for mobile phone and utility bills, where there are millions of people who pay a premium price to get less benefits than those who seek a better deal. I learned a very long time ago to leave people who take the first price to it, unless they actually ask for help in getting a better deal.

Consumer surplus varies among the population and the CoT can be seen as a vehicle for attracting custom from those who are only willing to pay lower than average.

 

[dcbwhaley]

Loophole, schmoophole, why does it matter what a particular valid use of one or more tickets is called?

Indeed. There is no such thing as a loophole, neither in railway regulations nor in traffic law. What is often called a loophole is actually an incompetently drafted rule or law.