Dec 18, 2019, 12:31 pm
Last edit by: wyogold
Related discussions in other Flyertalk forums:
AA potentially closing accounts due to credit card churning/churn
How to know if you're locked: (as of 12/22/2019)
- Call in to aadvantage reservations (800-882-8880) If you locked, you'll be forwarded to customer service instead of getting to the automated reservations system
- If you want to stay on the line, ask CSR if your account is locked (you tried to make a reservation but it wouldn't let you). CSR will inform you there's a note on your account and that corporate security will contact you
- Try to make a reservation for a super cheap hotel through useaamiles.com. There are 1000 miles / night hotels in New Delhi, so at worst you'll risk 1K miles. If you're locked, you'll see "Unable to process points. Please call our customer service for assistance."
So far, nobody seems to have gotten unlocked and gotten access to their miles back. Accounts with upcoming travel seem to be the ones that are getting terminated at the highest rate.
AA potentially closing accounts due to credit card churning/churn
How to know if you're locked: (as of 12/22/2019)
- Call in to aadvantage reservations (800-882-8880) If you locked, you'll be forwarded to customer service instead of getting to the automated reservations system
- If you want to stay on the line, ask CSR if your account is locked (you tried to make a reservation but it wouldn't let you). CSR will inform you there's a note on your account and that corporate security will contact you
- Try to make a reservation for a super cheap hotel through useaamiles.com. There are 1000 miles / night hotels in New Delhi, so at worst you'll risk 1K miles. If you're locked, you'll see "Unable to process points. Please call our customer service for assistance."
So far, nobody seems to have gotten unlocked and gotten access to their miles back. Accounts with upcoming travel seem to be the ones that are getting terminated at the highest rate.
AA accounts restricted (Nov/Dec 2019)
Feb 22, 2020, 3:17 pm
#2746
Join Date: Dec 2003
Location: NYC
Posts: 6,429
Nobody -- least of all me -- has suggested that DOT cut & paste anything from any other agency -- least of all the FTC. The point is quite simply that defining what terms mean is just as often helpful to consumers as not.
Definitions also have the advantage of providing standards and benchmarks for the regulated industry, in this case, air carriers. That too helps consumers because consumers know what they can expect (and not).
What is it that so worries you about laws which provide crystal clear definitions?
Definitions also have the advantage of providing standards and benchmarks for the regulated industry, in this case, air carriers. That too helps consumers because consumers know what they can expect (and not).
What is it that so worries you about laws which provide crystal clear definitions?
Precise definitions of these sorts of terms leaves room for creative companies to find ways to be unfair and deceptive without violating the explicit rules. Crystal clear essentially means narrower and that's not good for the consumer. If there are useful examples to give, publish those as specific rules.
Feb 22, 2020, 7:34 pm
#2748
Join Date: Mar 2014
Location: PWM
Programs: AA Plat
Posts: 1,335
Feb 22, 2020, 11:27 pm
#2749
Join Date: Jan 2013
Posts: 153
Nobody -- least of all me -- has suggested that DOT cut & paste anything from any other agency -- least of all the FTC. The point is quite simply that defining what terms mean is just as often helpful to consumers as not.
Definitions also have the advantage of providing standards and benchmarks for the regulated industry, in this case, air carriers. That too helps consumers because consumers know what they can expect (and not).
What is it that so worries you about laws which provide crystal clear definitions?
Definitions also have the advantage of providing standards and benchmarks for the regulated industry, in this case, air carriers. That too helps consumers because consumers know what they can expect (and not).
What is it that so worries you about laws which provide crystal clear definitions?
It's funny that the guy who's arguing that we have no case and should just go home because the AAdvantage T&C prohibits "exploitative practices" as however AA chooses to define that on a given day is completely aghast at the idea that the DOT would rely on standards as vague as "unfair and deceptive" in carrying out their mandate.
Last edited by billybayswater; Feb 22, 2020 at 11:33 pm
Feb 23, 2020, 12:37 am
#2750
Join Date: Feb 2020
Posts: 3
Data point to start:
Citi AA Exec, July 2018
Citi AA Plat Business, Aug 2018
Citi AA Plat Personal, Oct 2019
Citi AA Plat Business, Aug 2019
The above are the only Citi cards I have every held, and the only AA cards I have ever held. This applies to entire household as well.
Did not MS on the card, spent organically to reach SUB, then had much lower levels of spending
Had one revenue AA flight around June 2019, and one AA award flight (domestic first class to Hawaii) in Jan 2020.
Did not receive any account locked notification, and was able to access account up until shutdown.
Complete shutdown in Feb 2020, with approx 250k miles remaining in account.
Obviously used a mailer for the second AA Plat Business card; this was a physical mailer, and while I believe it was addressed to me, I guess it is possible it was addressed to my spouse- can't say I checked too carefully.
What's interesting about this is I don't think this is any kind of effort by AA to clean up the process- if it was, we probably would be seeing new rules coming from Citi, and would certainly no longer be inundated with mailers. Rather, I would surmise this is a desperate effort by AA management to give their corporate balance sheet a one-time boost, and presumably boost the bonuses for the management team as well. My reasoning is that:
1) In the past 5 years, AA has made between 50% and 100% of its profits from selling miles
2) The liability on the books for the AAdvantage program is roughly 5 billion dollars
3) AAs current value (market cap) is about 11.8 billion dollars, meaning wiping the AAdvantage program could theroetically raise the value of the company by almost 50%
4) AA made $1.686 billion in GAAP net income for 2019. That's less than half of their liability in the AAdvantage program. Any cut to the liability would make their profit much higher.
5) At its core, AA does not make any money by flying. In fact they generally lose money on passenger traffic. Freight is slightly better. But overall, sales of FF miles are the prime source of profit for the airline. This also means outstanding miles are one of the prime liabilities (rivaling even employee pensions).
In short I am guessing AA will keep sweeping through accounts, shutting down more and more until either a) some regulatory authority stops them or b) the public backlash is too great. By doing this in waves management minimizes the chance of either occurrence. If they can trim enough miles from their liability column, the balance sheet looks much better, the stock price rises, and executives get huge bonuses. This is short-sighted when viewed from the perspective of the airline as a lasting entity, but from the perspective of a management team that has failed to deliver on any promises to shareholders, it is a fantastic way to get a pile of cash before the inevitable. I would not be surprised to see the criteria slowly expand.
Logically they will also use algorithms to target members with high value redemptions- in doing so they can lower the average "value" of a redeemed mile, and justify reducing their balance sheet liabilities further even if the number of miles outstanding remains the same (since each mile will be "worth" less based on recent redemptions).
While normally AA's response might kill future earnings by diluting the perceived value of their miles (and remember, selling their miles is their primary source of income!), it is entirely possible that they have run the numbers and calculated that a relatively small number of people have outsized award mile balances and are obtaining outsized value (when compared to cash prices) for their redemptions. AA may very well be able to cull a small percentage of accounts while making a huge percentage difference in their balance sheet. There is also the possibility that management just doesn't care and will be laughing all the way to the bank.
At any rate, I harbor no delusions about my account ever being reopened, let alone having my miles reinstated. I can see no possible reason for AA to do so; after all, I can't fathom why they would close so many accounts without giving notice or employing less extreme measures other than to pad the bottom line. Even if AA is eventually fined, chances are the fine will be significantly less than the reduction in liability. Keep in mind that if they succeed in reducing their calculated "value" per mile as explained above, they would still win even if they had to pay this full "value" per mile to each customer with a closed account (double win actually, since the miles would be valued less, and the affected customers would be those likely to extract the highest value). This doesn't mean I think what American did is fair or right- they certainly seem to claim the ability to close an account at any time for any reason, but that doesn't make it right. While it would be great to see an enterprising individual take them to court, the chances of success are quite low.
Citi AA Exec, July 2018
Citi AA Plat Business, Aug 2018
Citi AA Plat Personal, Oct 2019
Citi AA Plat Business, Aug 2019
The above are the only Citi cards I have every held, and the only AA cards I have ever held. This applies to entire household as well.
Did not MS on the card, spent organically to reach SUB, then had much lower levels of spending
Had one revenue AA flight around June 2019, and one AA award flight (domestic first class to Hawaii) in Jan 2020.
Did not receive any account locked notification, and was able to access account up until shutdown.
Complete shutdown in Feb 2020, with approx 250k miles remaining in account.
Obviously used a mailer for the second AA Plat Business card; this was a physical mailer, and while I believe it was addressed to me, I guess it is possible it was addressed to my spouse- can't say I checked too carefully.
What's interesting about this is I don't think this is any kind of effort by AA to clean up the process- if it was, we probably would be seeing new rules coming from Citi, and would certainly no longer be inundated with mailers. Rather, I would surmise this is a desperate effort by AA management to give their corporate balance sheet a one-time boost, and presumably boost the bonuses for the management team as well. My reasoning is that:
1) In the past 5 years, AA has made between 50% and 100% of its profits from selling miles
2) The liability on the books for the AAdvantage program is roughly 5 billion dollars
3) AAs current value (market cap) is about 11.8 billion dollars, meaning wiping the AAdvantage program could theroetically raise the value of the company by almost 50%
4) AA made $1.686 billion in GAAP net income for 2019. That's less than half of their liability in the AAdvantage program. Any cut to the liability would make their profit much higher.
5) At its core, AA does not make any money by flying. In fact they generally lose money on passenger traffic. Freight is slightly better. But overall, sales of FF miles are the prime source of profit for the airline. This also means outstanding miles are one of the prime liabilities (rivaling even employee pensions).
In short I am guessing AA will keep sweeping through accounts, shutting down more and more until either a) some regulatory authority stops them or b) the public backlash is too great. By doing this in waves management minimizes the chance of either occurrence. If they can trim enough miles from their liability column, the balance sheet looks much better, the stock price rises, and executives get huge bonuses. This is short-sighted when viewed from the perspective of the airline as a lasting entity, but from the perspective of a management team that has failed to deliver on any promises to shareholders, it is a fantastic way to get a pile of cash before the inevitable. I would not be surprised to see the criteria slowly expand.
Logically they will also use algorithms to target members with high value redemptions- in doing so they can lower the average "value" of a redeemed mile, and justify reducing their balance sheet liabilities further even if the number of miles outstanding remains the same (since each mile will be "worth" less based on recent redemptions).
While normally AA's response might kill future earnings by diluting the perceived value of their miles (and remember, selling their miles is their primary source of income!), it is entirely possible that they have run the numbers and calculated that a relatively small number of people have outsized award mile balances and are obtaining outsized value (when compared to cash prices) for their redemptions. AA may very well be able to cull a small percentage of accounts while making a huge percentage difference in their balance sheet. There is also the possibility that management just doesn't care and will be laughing all the way to the bank.
At any rate, I harbor no delusions about my account ever being reopened, let alone having my miles reinstated. I can see no possible reason for AA to do so; after all, I can't fathom why they would close so many accounts without giving notice or employing less extreme measures other than to pad the bottom line. Even if AA is eventually fined, chances are the fine will be significantly less than the reduction in liability. Keep in mind that if they succeed in reducing their calculated "value" per mile as explained above, they would still win even if they had to pay this full "value" per mile to each customer with a closed account (double win actually, since the miles would be valued less, and the affected customers would be those likely to extract the highest value). This doesn't mean I think what American did is fair or right- they certainly seem to claim the ability to close an account at any time for any reason, but that doesn't make it right. While it would be great to see an enterprising individual take them to court, the chances of success are quite low.
Feb 23, 2020, 6:47 am
#2751
Join Date: Oct 2019
Programs: Flying Blue, Hilton Honors, Amtrak Guest Rewards
Posts: 2,394
I suspect that to the extent one can argue that they didn't intend to redeem the miles for flights (never having redeemed miles for a flight probably helps the argument, or at least having redeemed fewer miles for flights than earned for flights), judges are extremely likely IMO to find credit card miles outside the ADA. This may have implications in determining damages (if most of the high-value redemptions are for plane tickets vs. transfer to other programs, media subscriptions, gift cards, Admirals Club memberships etc.).
Feb 23, 2020, 7:45 am
#2752
Join Date: Jul 2017
Posts: 25
If your account is cancelled, will they only cancel award tickets? Or are paid tickets also getting cancelled?
Feb 23, 2020, 7:47 am
#2753
Suspended
Join Date: Aug 2010
Location: DCA
Programs: UA US CO AA DL FL
Posts: 50,262
It's funny that the guy who's arguing that we have no case and should just go home because the AAdvantage T&C prohibits "exploitative practices" as however AA chooses to define that on a given day is completely aghast at the idea that the DOT would rely on standards as vague as "unfair and deceptive" in carrying out their mandate.
DOT is a US government agency. If you don't like the law, you can't just take your business elsewhere (I suppose you can move to another country, but perhaps a bit extreme).
AA is a private party to a contract (that is all the t&c are) which you apparently chose to enter. If you don't like the terms, don't agree to them. If you don't like the product, fly some other carrier which will permit you to do what AA won't.
Feb 23, 2020, 8:16 am
#2755
Join Date: Oct 2006
Posts: 433
I found this information on the web :
Are terms and conditions enforceable?
Determining if Terms of Service Are Enforceable
Legal agreements should not be buried in the website footer. Courts have found this to be insufficient, and the terms are not considered legally binding. Clickwraps that are too simple are not enforceable.
When I joined the Aadvantage program 25 years ago I do not remember clicking any box to accept T&C
Also by AA accepting churning for so many decades it might be considered by the courts as an accepted past practice and needed to give notice before changing.
Are terms and conditions enforceable?
Determining if Terms of Service Are Enforceable
Legal agreements should not be buried in the website footer. Courts have found this to be insufficient, and the terms are not considered legally binding. Clickwraps that are too simple are not enforceable.
Determining if Terms of Service Are Enforceable
Setting up enforceable Terms of Service requires specific placement, explanations and proper record keeping including:- Proper and obvious notification to users that the Terms of Service exist.
- Legal agreements should not be buried in the website footer. Courts have found this to be insufficient, and the terms are not considered legally binding.
- Clickwraps that are too simple are not enforceable. The user must receive an obvious notification that the Terms of Service exist and use of the website confirms the user agrees to these terms. The user must click a button or check a box. This action helps confirm the user's agreement of the terms.
- Browsewraps may be easier for the user to use the website, proving acceptance is harder due to lack of an action like clicking a button or checking a box.
- Tracking Terms of Service agreements can be difficult as it must be continually updated to reflect updated versions, dates and acceptance data.
When I joined the Aadvantage program 25 years ago I do not remember clicking any box to accept T&C
Also by AA accepting churning for so many decades it might be considered by the courts as an accepted past practice and needed to give notice before changing.
Feb 23, 2020, 8:24 am
#2756
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,953
This is an accounting artifact. Miles are prepaid air travel (or discounts on air travel). Without an airline on which to redeem miles, they have little value, perhaps none. If the overhead and operating costs of the airline were allocated across the full enterprise AAdvantage would appear less profitable, and American Airlines would appear more profitable.
Feb 23, 2020, 1:38 pm
#2757
Join Date: Feb 2009
Posts: 6,602
AFAIK nobody received a locked notification, people were calling in and assuming they were unlocked if they could enter their AA account #, zip code and have the automated account read their miles balance or some other account info.
The only way to know for sure that you are not locked is to redeem miles and if it's for a flight have it actually ticket.
Chances are your account was locked since December.
Feb 23, 2020, 2:04 pm
#2758
Suspended
Join Date: Mar 2001
Location: FIND ME ON TWITTER FOR THE LATEST
Posts: 27,730
I'd like to remind both of you that Amex did the same darn thing. As an aside, they clawed me back three times!!! These corporations are not people and we should not show them mercy. Even if they were people, I have no mercy.
Feb 23, 2020, 2:14 pm
#2759
Join Date: Nov 2013
Location: NYC
Programs: BA
Posts: 954
There is an even bigger difference between 1) clawing back miles earned due to alleged gaming and 2) confiscating all miles, even those legitimately earned, and banning said user.
The problem with AA’s path #2 here is that A) they are throwing “the baby out with the bathwater” and getting rid of a lot of longtime customers who only dabbled lightly in this and B) if they had only confiscated miles they believed to be earned via gaming, they would not provoked as much ire and the number of lawsuits filed against them, warranted or not, would have been significantly less.
The reason I believe AA chose the second approach is either or both of: i) they don’t have enough data to know which miles were earned legitimately and which were earned thru mailers (and whose mailers) and ii) they believe they will still come out ahead after settling (or even losing) whatever lawsuits are filed against them as a result.
The problem with AA’s path #2 here is that A) they are throwing “the baby out with the bathwater” and getting rid of a lot of longtime customers who only dabbled lightly in this and B) if they had only confiscated miles they believed to be earned via gaming, they would not provoked as much ire and the number of lawsuits filed against them, warranted or not, would have been significantly less.
The reason I believe AA chose the second approach is either or both of: i) they don’t have enough data to know which miles were earned legitimately and which were earned thru mailers (and whose mailers) and ii) they believe they will still come out ahead after settling (or even losing) whatever lawsuits are filed against them as a result.