Judge: Obviously Delta Gets “Kickbacks” When You Buy Insurance at Checkout

Should Delta Airlines be able to sell you trip insurance? After all, they’re not, a recent lawsuit asserts, licensed to sell insurance. And, the lawsuit goes on to say, the fact that they get significant “kickbacks” from the insurance company they recommend without explicitly disclosing it is “deceptive conduct.”

They should be able to, and they can, asserted a judge in a 24-page summary judgment filed in federal court when overturning a class action lawsuit spearheaded by a flyer who claimed that the money he paid for insurance as he was buying his ticket was “a result of its deceptive conduct.”

The Impression That It’s in Your Best Interest

When Judith Donoff was buying tickets for a trip from New York City to Ft. Lauderdale, Florida on Delta’s website, a prompt asked her whether or not she wanted to add travel insurance from Allianz. Donoff had never purchased travel insurance before, but because Judith was “carrying photo albums and other possessions of a family member to a memorial service,” she opted for the insurance.

Now she’s suing Delta for “deceptive practices relating to its presentation of the charge for trip insurance sold on its website” after learning that Delta has a financial relationship with Allianz insurance, a fact that wasn’t disclosed on Delta’s website. Because there is no advertising disclosure, Donoff argued, customers get “the impression that the trip insurance is in the consumer’s best interest” while in fact, “Delta is pushing the product because it is in its financial interest to generate sales.”

And, the argument continues, because Delta is earning money off of its relationship with Allianz, it is essentially selling insurance despite the fact that “it is not licensed as an insurer or insurance agent in Florida.”

“It seems self-evident that Delta would be compensated”

This class action first made the news rounds in 2018 when it was announced. Last week, on Friday, Mar. 6, U.S. district judge Donald M. Middlebrooks dismissed the lawsuit entirely because the suing parties could not prove the act of advertising or selling travel insurance was deceptive. In particular, they found Delta used “reasonable efforts” to promote travel insurance sales through their checkout process.

“It seems self-evident that Delta would be compensated,” Middlebrooks wrote in the decision. “The chance to sell insurance coverage for a trip at the same time a traveler is booking a flight is a valuable and highly sought distribution channel. Just as Amazon is compensated for the sale of products on its site, or Publix is paid for selling the groceries in its stores, it is not surprising that Delta receives compensation.”

Furthermore, the judge determined that calling a “marketing fee a ‘kickback’ doesn’t make it one.” Delta was not required to look out for the flyer’s best interest because of their relationship: “Both parties agree that this was an arms-length transaction with no fiduciary relationship.”

Thus, the practice of selling travel insurance through the booking process will stand for another day. As with every insurance product, travelers should shop around and consider multiple quotes before purchasing any product. But the topic is not yet closed: a separate lawsuit is ongoing accusing JetBlue of similar practices remains active, while the law firm representing the flyers claims American Airlines settled a lawsuit over the same situation.