My first thought is it is possibly miles. Another one I have heard and it relies on connections, is that they know someone on the inside at BA, who books cheap Business Class fares and then the contact gets the passengers upgraded to First. I do know of someone who did this and got found out – they cancelled about 50 reservations and the person at BA was I believe removed from there post. I think they also improved auditing of these type of upgrades afterwards.
I can’t completely verify this story, but I was talking to one of there ex-business partners who explained how his partner had being doing quite dodgy things for a while – and partly why he left.
I’m sure there are lots of stories similar to this. But to be so vast in price is quite unusual, and if it does happen you should find that major travel companies will also get the same fares and be properly licensed.