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Transportation Department Defines Unfair and Deceptive Practices for Airlines

U.S. Department of Transportation Building

Airlines will soon get a bigger say as to what constitutes “unfair” or “deceptive” practices thanks to a rule change finalized by the U.S. Department of Transportation over the Thanksgiving 2020 weekend. Under the shift, the department must hold formal hearings for new rules, and allow airlines to have their say before enforcement action is taken.

The U.S. Department of Transportation (DOT) did not take “Black Friday” off this year, instead opting to finalize a proposed rule that potentially shifts the definitions of “unfair” and “deceptive” practices in favor of airlines and travel agents. The department announced a final rule on Friday, Nov. 27, 2020, codifying definitions for “unfair” and “deceptive,” while creating new rulemaking and enforcement activity policies.

Rules Create Definitions Around Terms “Unfair” and “Deceptive”

Under the new rules, the DOT created concrete definitions for the terms “unfair” and “deceptive” when it applies to airlines and ticket agents. In order to meet the standard of “unfair,” a practice has to cause or must be likely to cause “substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition.”

To meet the definition of “deceptive,” a practice must be “likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter.” Materials are anything that may affect a consumer decision about a product or service. Under the new rule, proof of intent is not required to establish an “unfair” or “deceptive” practice.

In addition to the definition changes, airlines will be given a bigger say on how future regulations are applied. For “future discretionary regulations” based on the standards for “unfair” or “deceptive” practices, the DOT must hold a formal hearing. In addition, before the DOT takes enforcement action, airlines and ticket agents in question will be allowed to present “relevant evidence” on their cases.

“The rule will benefit the public and regulated entities by providing greater transparency and predictability on how the Department conducts its aviation consumer protection rulemaking and enforcement activities,” the DOT writes in their announcement. They also claim the changes “will help ensure that the Department’s enforcement practices and regulations stay within the scope of the Department’s statutory authority.”

The rule changes are among the final actions of secretary Elaine Chao, as the Trump administration days are numbered. For a new Transportation secretary to overturn the rules under a Biden White House, it would require a potentially long rule-making process which would likely involve the major air carriers.

Public Comments Express Concerns About New Rules

While the rule will become permanent in 30 days, public comments on the proposal express concern over airlines influence on future changes. In their submitted commentary, FlyersRights.org notes that “state and local consumer protection laws have been preempted by the Airline Deregulation Act, and there is no private right of action…for consumers to pursue in court.” Given the “vastly superior financial resources and exclusive possession of data necessary for rulemaking,” the consumer advocates express concern that more power is handed over to air carriers.

Concerns over consumer protections have new importance in 2020, as the COVID-19 pandemic forced flyers to cancel tickets and fight with airlines over when a refund is duly owed. In September 2020, the Colorado Attorney General asked the U.S. Department of Transportation to open an investigation into Frontier Airlines refund policies, noting that the department was “best suited” to take action. In a statement to FlyerTalk, the attorney general’s office confirmed that the issue is still pending.

The entirety of the rulemaking documents and public comments can be found at regulations.gov, under docket number DOT-OST-2019-0182.

Feature image courtesy: kmf164/Flickr/CC BY-SA 2.0

DMIND00 December 2, 2020

Yes I find the Airlines especially AmericanAir is good at playing word games with their customers. Full Flights are now called "Busy Flight". Canceled flights are called "Schedule Change". gyved These too should be regulated. Be honest what is the problem with saying our flight will be almost full. Busy sounds like a lot of things will be going on during the flight. When they cancel your flight that is what they need to say and tell you they are rebooking you on the next closest flight of which for me it was 5 hours earlier. But no need to worry flight delayed says weather issue but no issue all other airlines flying on time.

cmd320 December 2, 2020

So they've defined these terms using highly subjective and ambiguous phrasing. Very useful. What's the point of government organizations again?

MRM December 2, 2020

Letting the wolves write the rules about entering the henhouse? Great idea!

BC Shelby December 1, 2020

Gastrocnemius: "It is like allowing an airplane manufacturer to certify their product’s airworthiness, rather than let a regulator do it…" ...and we've all seen how well that worked out. for the last 21 months.

strickerj December 1, 2020

Surely the new rules won't apply to DOT complaints already submitted? Considering airlines have always refunded for cancellations on their part, and some (the Canadian airlines in particular) only recently updated their CoC to only refund cancellations "within their control" (which isn't defined anywhere beyond a few examples like weather), I'd say the airlines' recent actions absolutely do constitute "unfair and deceptive" practices under the new rule. What other business can unilaterally cancel the service you've paid in advance for (sometimes far in advance) and only have to provide, effectively, a store credit as compensation?