MilesBuzz! - Vanishing FF miles -- Airlines take them back

There was an article in today's New York Times about how airlines are coming up with "audits" on their best passengers in order to take back their hard-earned miles. These pax get accused of illegally aquiring miles and then end up losing most if not all of their FF miles and status. Two examples of passengers getting the treatment come from UA and US.

Has this happened to you? Should we be concerned that with airlines' bad business models, they will be taking back miles we have earned for reasons which may or may not be valid? Are the days of FF accounts over b/c we could lose our hard-earned miles at a moment's notice? This is just not the way to treat your best clients. Read what happened to these men; the airlines treated them like criminals.

http://www.nytimes.com/2004/11/23/business/23audits.html?oref=login

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It seems to me that if you keep your nose clean, there's little to worry about.
Although we don't know all the details of Mr. Sommer's case, I can't believe UA would hassle one of their better customers for absolutely no reason. Just as there are many people who think nothing of stealing money, there are plenty of mileage theives/scammers as well.

"With close to 10 trillion unredeemed frequent-flier miles among the nation's carriers, rewards programs have quietly become a target."

and i personally have a grand total of 2167 on ua and 7873 on US
and i'm trying to find a way to use them, withoutout getting magazines!!

there was a time - say 15 to 20 years ago - when almost anything went with the FF programs. there is a conflict here is that it is in the financial interest of the airlines to sell the ff miles, but not in their interest to redeem them. look at all the hassles, rules and barriers in place. like no 1 way trips, no combining your account on nwa, cont or delta to get a rt


There was an article in today's New York Times about how airlines are coming up with "audits" on their best passengers in order to take back their hard-earned miles. These pax get accused of illegally aquiring miles and then end up losing most if not all of their FF miles and status. Two examples of passengers getting the treatment come from UA and US.

Has this happened to you? Should we be concerned that with airlines' bad business models, they will be taking back miles we have earned for reasons which may or may not be valid? Are the days of FF accounts over b/c we could lose our hard-earned miles at a moment's notice? This is just not the way to treat your best clients. Read what happened to these men; the airlines treated them like criminals.

http://www.nytimes.com/2004/11/23/business/23audits.html?oref=login

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Normally, I'm a fan of the NY Times but that article is so shallow, it's laughable and a waste of space.

I'm sure all the airlines routinely 'audit' FF accounts - at least, in terms of looking for unusual patterns or oddball activity. As for re-claiming miles that FFers weren't entitled to - what does the writer expect them to do if they find out that's happened?

As for the airlines trying to minimize their liability for FF miles by 'auditing' people's accounts .... I don't think so. There are a lot of 'assumptions' that go into determining how many miles will get redeemed and what the 'value' (i.e., liability) of those redemptions is ..... the airlines will reduce their liability far more by aggressively 'tweaking' the assumptions they use than they ever will by auditing people's accounts, looking for miles they weren't entitled to.

There was an article in today's New York Times about how airlines are coming up with "audits" on their best passengers in order to take back their hard-earned miles. These pax get accused of illegally aquiring miles and then end up losing most if not all of their FF miles and status. Two examples of passengers getting the treatment come from UA and US.

Has this happened to you? Should we be concerned that with airlines' bad business models, they will be taking back miles we have earned for reasons which may or may not be valid? Are the days of FF accounts over b/c we could lose our hard-earned miles at a moment's notice? This is just not the way to treat your best clients. Read what happened to these men; the airlines treated them like criminals.

http://www.nytimes.com/2004/11/23/business/23audits.html?oref=login

Userid: flyertalk
Password: flyertalk


When I initially read (i.e. before I actually read the article) your analysis of the article and subsequent follow-up questions, I thought that your comments seemed to be a little inflammatory. It's good to know that after reading the article that my gut wasn't too far off. We heard only one side of the story in both cases, and it is quite possible that they were, in fact, breaking the airlines' rules. We all agree to the terms and conditions of these programs when we join them -- and then wonder how someone who might possibly have sold award tickets or done something else against the T&Cs might have his account suspended.

I will say that the NY Times piece did seem to be a little slanted, too.

Stevekoe

However, the fact that the actions by the airlines in question were immediate does not seem to bode well. There does not appear to be any request for explanation. Nor does there seem to be any opportunity for appeal.

What if their "audit" was mistaken? Not a good scenario. :(

Further, from a business model standpoint, do the airlines really want to alienate their best customers any more than they already are through poor service and devaluation of FF benefits? :td:

If T&C were violated, I could see where miles/points in question might be revoked & even additional charges levied. But to completely remove status seems a bit extreme. Not the way to win customers' loyalty.

I think the most important point the article made is that the airlines claim to "own" the miles. It would be interesting to see how this holds up in court. I'm not sure how FF programs compare to other incentive programs (i.e., can the incentive be withdrawn at any time between the time you earn it and the time you try to redeem it, for any reason or no reason at all).

My guess is Mr Sommer's "obtained" (eg through Coupon Connection) some bump vouchers and used them for his travel to South America. He was caught and owed the airline for the travel to South America.

However I don't think it is fair of United to just add a $600 fee for "improper use of vouchers" plus confiscate 2 million frequent flyer miles. Bump vouchers are issued in emergencies and I doubt United can argue the receipient (and the ultimate user) could be expected to be aware of these kinds of rules, especially when bump vouchers are stated as being transferable. The back of the bump voucher usually says it can't be sold or bartered, but I doubt it says in the fine print that the penalty for doing so is $600 + loss of all frequent flyer miles to both the buyer and seller.

The lesson from this is to stop trading bump vouchers through Coupon Connection.

Vanishing hotel points is not unheard of either. Hilton HHonors has been allegedly engaged in a crackdown in 2004.

Is the author even checking his own assertions against the facts he later presents in the article? How do you start your article with this:
It took a decade for Michael Sommer to earn more than two million frequent-flier miles on United Airlines. It took a single dispute over a ticket refund for him to lose his elite status...
while mentioning a couple of paragraphs later that
[United] said, however, that the customer was punished after a string of program abuses dating back more than two years and the action was not a result of a single infraction.

My interpretation was that while from Mr. S's perspective it seemed to stem from a single incident, UA had a differing perspective of two years of abuses.

What is of concern to me is that if Mr. S is being forthwright in his statements, then he was unaware of the prior infractions and had no opportunity to explain, correct, or appeal. Further, what of the possibility that the mistakes in his account were not his fault, but due to incorrect postings on the part of the airline itself. This leads to a precarious position, the airline makes a "bank error in your favor" and you don't say anything about it. I could see where they might want the incorrect credit back, but stripping his status and ALL other accumulated miles still seems quite extreme. :(

The bottom line to all of this, though, is that we don't know what happened in these two situations. We have biased accounts of what happened, but no facts. Mr. S says that he was unaware of any wrongdoing, but UA says that they sent him a letter previously. I am inclined to believe them. I also think that listed in the T&Cs of many loyalty programs is a statement that says something to the effect that they have the right to revoke your miles if they suspect an impropriety. I would hope that someone pretty high up in the marketing department at UA would have been in on the decision to revoke said miles and status, and it was investigated carefully. My gut tells me that someone assessed that the loss of this customer was something that they could live with.

Stevekoe

how much money must one spent to get 2mil. miles?

i think this is much money.

and if he did some wrong things, i think this will be around some hundred dollars, it is not fair to take the 2mil. miles.

it should be enough let him pay a extra fee for cheating, and after give him a yellow card. if something happens, closing of his account.

for example amex mileage program, let u use the miles even if you account is closed.

it would be fair, to give the customer a timeframe, in which he can use the miles.

taking it all away is illegal. taking away miles, is nothing else than thivery , which is of course a nice deal for the airlines.

Vanishing hotel points is not unheard of either. Hilton HHonors has been allegedly engaged in a crackdown in 2004.

Yep. Starwood too. Just yesterday I had the results of a Starwood audit posted to my account. Lost a few thousand points that were accidentally posted to my account (for the dollar amount the hotel bills Starwood for the free nights which the hotel mistakenly included in their Starpoints revenue transmission to Starwood).

Also lost a few Stay and Night credits toward elite that the hotels accidentally credited to me on free award stays (Starwood does not allow Stay and Night credits on free stays like Hilton does). That part didn't matter one bit though as even after the audit deduction, I way exceeded the highest elite level requirement. But if you were someone that was counting on the mistakenly posted Stays or Nights to get you to elite, you might be in for a nasty surprise if they audited you and deducted them so late in the year that you couldn't scramble to make up for them.

Best I can tell they went back and reviewed at least one year's worth of activity on my account.

On a recent trip where my wife was flying on a Spring Companion cert, she received mileage credit, with 2P bonus. I called MP to inform them of the mistake, and the rep said it would get caught eventually in an audit sweep and removed, with no fault attached. She cautioned against actually trying to use the miles for award travel, however.

So, I tried to do the right thing. My conscience is clear. :)

taking it all away is illegal. taking away miles, is nothing else than thivery , which is of course a nice deal for the airlines.

This comment interested me, as I agree with a previous poster's comment that the most interesting aspect is the airlines' claim to own the miles. The last paragaph of the NYT article, I think, is illuminating:

Mr. Roberts said his client was considering suing United to recover his rewards. "They can't just arbitrarily take his miles away from him," he added. "I mean, if you violate a bank's rules, do they take all the money you have on deposit away from you?"

If the airlines actually do own the miles, it is legal for them to take them away. If they are merely holding your miles for you (like a bank), taking them away is thievery. Usually the FFP T&C says airline miles are the property of the airline, but I'm not sure if this is legal. In the case when you get "free" airline miles for flying, it may be justifiable for the airline to say that they decided against giving you those miles, and took them away--the worst offense they could have committed is possible "false advertising" because you were told you would get miles when you flew Air Whatever.

But what about airlines' newer policies that allow pax to directly buy FF miles in order to redeem awards, or allow companies to buy miles to give away?

If a customer has bought and paid specifically for MILES, is it legal for the airline to say, "Even though we are charging you money to buy these miles, we still own them, and we can take them back for any reason" ? The premise is seriously dubious. Would a bank ever get away with saying, "Even though we are selling you $1000 in travellers' checks, the checks remain our property, and we can void them at any time for any reason without refunding your $1000" ?

This comment interested me, as I agree with a previous poster's comment that the most interesting aspect is the airlines' claim to own the miles. The last paragaph of the NYT article, I think, is illuminating:

Mr. Roberts said his client was considering suing United to recover his rewards. "They can't just arbitrarily take his miles away from him," he added. "I mean, if you violate a bank's rules, do they take all the money you have on deposit away from you?"

If the airlines actually do own the miles, it is legal for them to take them away. If they are merely holding your miles for you (like a bank), taking them away is thievery. Usually the FFP T&C says airline miles are the property of the airline, but I'm not sure if this is legal. In the case when you get "free" airline miles for flying, it may be justifiable for the airline to say that they decided against giving you those miles, and took them away--the worst offense they could have committed is possible "false advertising" because you were told you would get miles when you flew Air Whatever.

But what about airlines' newer policies that allow pax to directly buy FF miles in order to redeem awards, or allow companies to buy miles to give away?

If a customer has bought and paid specifically for MILES, is it legal for the airline to say, "Even though we are charging you money to buy these miles, we still own them, and we can take them back for any reason" ? The premise is seriously dubious. Would a bank ever get away with saying, "Even though we are selling you $1000 in travellers' checks, the checks remain our property, and we can void them at any time for any reason without refunding your $1000" ?


although not a lawyer
i think you may be onto something here

i get a credit card
pay a fee
and get x miles in my account
does the airline own them?

i stay at a hotel
and have miles credited to my ff account
does the airline own them?

i eat at a idine restuarant
....

consider this case
i bought a service from merchant x
i paid with my amex card
part of the service was not valid
i asked for my money back
merchant said no
it was against their rules
i said there rules dont matter as i paid with Amex
so only Amex rules matter
and i got my partial refund
had i paid with cash i would have been SOL

cnsidering that selling ff miles are now a profit center
i'd think the airlines would be hesitant to do anything that would damage that part of the business
but then when have the airlines been run like rational businesses??

Mr. Roberts said his client was considering suing United to recover his rewards. "They can't just arbitrarily take his miles away from him," he added. "I mean, if you violate a bank's rules, do they take all the money you have on deposit away from you?"

If you deposit fake currency into your bank account one day and then withdraw real currency another day, you better believe they will freeze your account. Later, they will let you withdraw some money to pay the fines.

Considering the number of passengers UA carries, and the fact that we are talking about just one of them, if I were a betting man, I would place all my bets on the square marked "passenger cheated UA on several occasions and deserves to get the boot".

Apart from the merits of this case, which I do not know, there are issues of due process here. The airlines could of course make a mistake. And while the airlines tell me the miles are theirs, I think they are mine. And I think my view is not unreasonable. There are several things the airlines do, this and some ticketing restrictions that would as mentioned above get pretty interesting in court. To some extent I wish this would happen as it might get rid of the rat's nest of rules that I think ultimately cost more than they benefit the airlines.

As has been discussed many times on FlyerTalk, the fact that a business puts in a "reserves all rights" clause in a contract of adhesion such as with mileage programs does not mean they can do whatever they want to. In particular, cavalier confiscation of miles would almost certainly be seen by a court as "odious" and not allowed even if it were explicitly laid out in the T&C of the program.

If this guy was scamming the airline, however, I think the courts would back them up.

QL

On a recent trip where my wife was flying on a Spring Companion cert, she received mileage credit, with 2P bonus. I called MP to inform them of the mistake, and the rep said it would get caught eventually in an audit sweep and removed, with no fault attached. She cautioned against actually trying to use the miles for award travel, however.

So, I tried to do the right thing. My conscience is clear. :)

Several years ago an airline credited my FF account with some miles I hadn't earned. I sent a letter explaining the mistake, and the airline made a correction, which, however, only compounded the mistake. I sent another letter explaining in detail what had happened, and the airline make another correction, which only made the mistake even worse. I then gave up, and nothing ever came of it.

Well, it isn't exactly clear if the airline do have the rights to take them away under all conditions.

The reason is that that if the airline didn't award them all and instead they came from credit cards or non airline stuff. There could be other people on the hook if they are taken away. It could raise questions about whether the credit card companies and other suppliers were deceptive or unfair in their ads in disclosing the possibility. It then would be up to the Federal Trade Commission to decide.

My guess is the airlines can take away the miles earned through flights but are treading on interesting grounds if they take away those earned elsewhere.

But I'm not a lawyer. Would be interesting to see comment.

Funny, I remember calling MP when they accidentally added 24 500 milers to my account a few months ago... and as I was on the phone I refreshed my screen and before my eyes, she had already removed the certs from my acct.!!!

On a recent trip where my wife was flying on a Spring Companion cert, she received mileage credit, with 2P bonus. I called MP to inform them of the mistake, and the rep said it would get caught eventually in an audit sweep and removed, with no fault attached. She cautioned against actually trying to use the miles for award travel, however.

So, I tried to do the right thing. My conscience is clear. :)

Several years ago an airline credited my FF account with some miles I hadn't earned. I sent a letter explaining the mistake, and the airline made a correction, which, however, only compounded the mistake. I sent another letter explaining in detail what had happened, and the airline make another correction, which only made the mistake even worse. I then gave up, and nothing ever came of it.

That sounds like the Friends episode in which Pheobe finds that $500 mysteriously appeared in her account, and when she contacted the bank about the error, they apologized, credited her account with $500 more dollars, and sent her a free football phone as compensation. She gave all the money to a homeless man, but he bought her a can of soda, which she found a severed thumb floating in, and when she contacted the soda company about the thumb she found they sent her $10,000 in compensation!

But I thought that "bank errors in your favor" only happened on TV and in Monopoly.

If this guy was scamming the airline, however, I think the courts would back them up.Agreed.

In such instances of potential litigation, the airline is highly unlikely to make public statements telling its side of the story.

Conversely, while the scammer might be only too happy to run to the press to exact a measure of "revenge," such as it is, on the airline, he is unlikely to sue.

I highly doubt that such auditing actions taken by airlines have anything to do with reducing their liability in unredeemed miles. We've all heard these stories from time to time about people getting their miles yanked, and I doubt that they add up to even 0.0001% of outstanding miles.

What it has everything to do with is revenue protection. For example, if they catch you repeatedly doing back-to-back or throw-away ticketing (such that it's obviously not a one-off or accidental case) and yank your miles, I doubt that they care little, if any, about the miles. They're using them as leverage, punishment, and to set an example to protect the revenue they lost due to the illicit ticketing scheme.

Several years ago an airline credited my FF account with some miles I hadn't earned. I sent a letter explaining the mistake, and the airline made a correction, which, however, only compounded the mistake. I sent another letter explaining in detail what had happened, and the airline make another correction, which only made the mistake even worse. I then gave up, and nothing ever came of it.

.......But I thought that "bank errors in your favor" only happened on TV and in Monopoly.

America West once credited me with miles for one way of a free award RT.
I figured that they weren't mine to begin with, so I called them and asked why I didn't get any for the return trip :D

They took the "gift" away within about a minute.

see message below

America West once credited me with miles for one way of a free award RT.
I figured that they weren't mine to begin with, so I called them and asked why I didn't get any for the return trip :D

They took the "gift" away within about a minute.

America West used to claim that any ticket paid for in any part with denied-boarding vouchers was ineligible for miles. But if credit was to be on a partner airline you could send it in to them and usually get it credited that way. Don't know if that's still the case since it's been so long since I've flown them.