flyerd

So, I was looking for articles about airlines going after brokers who allowed flyers to sell, barter or trade their tickets. Having had a few conversation with very convincing and knowledgeable frequent flyers from flyertalk, I was genuinely concerned over the consequences of my selling my airline miles on sites like craigslist or flyhub.com.

So I googled airline lawsuits over miles sale, and found one brought upon a miles broker by AA. In this same article they mentioned an instance in which a class action lawsuit had been brought upon Delta by frequent flyer for prohibiting the sale of miles. So it has already been done, and my guess is it will be done again. Delta ended up settling and paying these flyers. This is to my point that everyone should be allowed to sell their miles, they earned them, it's theirs. As far as I'm concerned the only people doing something illegal are the airlines. So for now I will continue to sell on flyhub.com, craigslist, and now considering loyaltymatch.com too

I pasted the information below: the case, the full article, and the excerpt that specifically addresses the class action suit brought upon delta. There should be more of those really. Any lawyer around???

Allison Haas, et al v. Delta Air Lines Inc., United States District Court, Southern District of New York, Case No. 03 CV- 0589.

http://www.insideflyer.com/articles/...e.php?key=4076

A Possible Defense
This case is but the latest in this ongoing skirmish between the airlines and those who would engage in the buying and selling of miles. To date, the airlines have enjoyed a perfect record defending their programs against these violators. But in 2005, the first potential crack appeared in what had otherwise been an impenetrable defense. That crack was in the form of Allison Haas, et al v. Delta Air Lines Inc., United States District Court, Southern District of New York, Case No. 03 CV- 0589.

The case involved three members of the SkyMiles program who got busted selling their miles and decided to turn the tables on Delta. The members claimed that, because Delta made it virtually impossible to actually claim the awards they wanted, they felt they had no choice but to sell them or else risk the miles expiring. The members began putting together a class-action lawsuit on behalf of all SkyMiles members who allegedly "had Delta SkyMiles wrongfully confiscated or taken by Delta."

We say they "began" putting together a class-action lawsuit because a settlement was reached while the motion to certify a class-action lawsuit and a motion for summary judgment was pending. Why did Delta agree to settle? We'll never know, as the settlement had a confidentiality provision in place. It could mean that Delta feared a trial by jury, who might have been sympathetic to the plight of the frequent flyer. Of course, it should also be noted that, in agreeing to settle, Delta might have only had to payout to the three members involved, rather than the potential millions if the class action had been certified and won.

In this case brought against Delta, it was argued that SkyMiles are a valuable commodity, not merely because they entitle members to awards and benefits, but because there is an active market in SkyMiles, where people "regularly advertise in daily newspapers throughout the United States, on a number of Internet Web sites, and in other media." These awards are then bought, sold, and bartered. As well, the suit alleged that Delta had restricted the use of SkyMiles by adopting "blackout periods, capacity controls, and expiration dates" that devalue the SkyMiles. And that, "Delta has engaged in a pattern of threats and intimidation," asserting that sale or barter of SkyMiles is unlawful. The threats listed were "of mileage forfeiture and account closure" should an owner of SkyMiles trade in them. Delta has on occasion made good on these threats by a "consequent forfeiture of credited miles and by deducting large amounts of miles from accounts as a penalty."

In that case, the plaintiffs also contended that these practices have been committed in conspiracy with American, United, and Continental Airlines.

So how will the defendants in the current case justify their deeds? If they know, they aren't saying ... not in so many words, at least.

When we contacted some of the businesses involved in this case, one of the parties said, "I do not know what you are talking about," and subsequently hung up the phone. Others responded by relaying to us comments they frequently hear from their customers, along the lines of being frustrated because they can't get the awards they want so they might as well sell the miles -- comments that were strikingly similar to those expressed as part of the 2005 case against Delta.

One AAdvantage member even told us that LTS sent him an email on May 14, 2007 advising him to lie in response to inquiries from American by fraudulently misrepresenting that LTS "provides a service to you where by [sic] they set up reservations for you so that you can use your frequent flyer miles. It has become so difficult to find award space on your own that is worth it to pay a $100 booking fee to this company to set things up for you."

robhakari

just my opinion, but Delta more than likely settled since it was (likely) much cheaper to settle than to pay attorney's fees, court costs, etc.

flyerd

You might have a good point. It;s certainly encouraging to me. I don't think airlines should sue for this to begin with. They should allow people to do as they wish with their miles. Now I can't wait to get busted too, I'll do the same thing, turn the tables on them with a similar class action lawsuit. These airlines really need to back off

hfly

You do realize that insideflyer and flyertalk are both run by the same person, right? Didn't think so.

flyerd

Ok I'm lost. What do you mean? What's your point? What am I missing?

cepheid

Except that no, the miles are not "theirs." What they have earned is a non-transferable license to use those miles to redeem awards. The T&Cs of every mileage program are very clear on this point. For example, the T&Cs of United Mileage Plus explicitly state: "7. Accrued mileage and certificates do not constitute property of the member." I don't think it can really get any more clear than that: miles are not your property, and therefore you cannot do with them as you wish. Their use is governed by the T&Cs of the program, and when you signed up for the program, you agreed to abide by those T&Cs.

Even the federal government disagrees with you. Government workers used to not be able to accrue personal miles when traveling on government business - the gov't used to require that any miles accrued be used only for gov't business, thereby saving the gov't money. Only recently did they decide that travelers could keep their miles for personal use (largely because the administration costs to ensure workers used their miles properly outweighed the cost savings from those miles).

What's more, the IRS currently does not tax miles because they are considered a form of rebate. Rebates are also governed by T&Cs and rebate companies are perfectly within their rights to withhold rebates if the applicants fail to meet the T&Cs for redeeming those rebates.

(I should also point out that if you are earning money by selling miles or awards, then you are legally obligated to declare that income on your tax return, especially if you consider the miles "earned.")

The law would disagree with you: what the airlines are doing is perfectly legal. To be perfectly clear, what you are doing (selling miles and/or awards) is not illegal... it is merely against the program rules to which you agreed when you signed up for the program. If an airline chooses to confiscate your miles and/or terminate your participation in the program, they are merely enforcing the contract to which you agreed, and that is also not illegal.

That is absolutely the most reasonable explanation. Lots of companies settle suits that they know they could win, not only because it is much cheaper to do so, but also because of potential PR problems during the suit. It's called "cutting their losses." Many frivolous lawsuits bank on companies doing exactly this, and is why many frivolous lawsuits are filed. If the U.S. legal system forced the loser of a suit to pay all associated attorney and court costs (as is the case in some other countries), there would be far, far fewer frivolous lawsuits filed.

kevinsac

Ahhhh......out of the mouth of babes!

We all come here convinced that I am the one who are going to change the whole FF and travel world. Then, we stick around long enough to realize it ain't so.

Welcome to FT, flyerd. ^ We'll all be in line behind you if you ever find the magic touch to accomplish that of which you dream. There are many who have gone before ye, myself included!

flyerd

Thanks Kevin, it's encouraging to know I'm not the only one to think it, that alone is somewhat comforting. Rest assured I'll keep pushing until I find a way, I might even end up making it my lifelong cause :-) Hey what do I have to lose (thousands in legal fees) come on, greedy lawyers crawl the streets.

lougord99

I won't argue against your selling miles and trying to get away with it. But your sense of entitlement to do so perplexes me. Consider these 3 scenarios: 1) the airline sells you a ticket and awards no miles 2) the airline sells you a ticket and awards you miles that have limitations attached - such as you cannot sell these miles 3) the airline sells you a ticket and awards miles with no limitations attached.

Certainly, scenario 1 is a possibility. I don't understand why you feel scenario 2 and scenario 3 are identical situations.

Why have you 'earned' the miles in scenario 2 but have not earned them in scenario 1.

hfly

My point being that while you may think you are a bigtime FF, and you have all these great ideas, I guarantee that there are many here that dwarf not only your FF experince, but know this subject backwards and forwards and all the pitfalls which you have not even yet considered. Considering the fact that your quoted article is from the magazine which is linked to this BB and that not only do tens of thousands here subscribe to that same publication and have read that article many times, what I am saying is that what you write is only not new, but essentially meaningless, as you have essentially came back to where it originated and are trying to present it as something new.

flyerd

I fly a lot, I had never join a forum until now and had not visited this one until last week. I fly for work, not pleasure, never pretended to know everything about the FF program quite the contrary. Not sure where this is coming from but ok. The very reason I ask so many questions is precisely because I know very little.

graraps

Essentially, the legal argument would be that the contract term prohibiting the sale of miles is an unfair and consequently unenforceable one.

I can see both sides of the argument and honestly have no opinion on whether it is unfair or not. It would be up to the court to decide on that.

flyerd

I like the way you put it, yes this pretty much sums it up. Except you articulated it better than I could have. Thanks for taking the time to do that.

reubencahn

I am not a civil lawyer and the following is not legal advise of any sort: That contract terms are unreasonable, unfair, or one-sided is generally no bar to their enforcement. Courts will refuse to enforce contract terms that are "unconscionable." This sounds like terms that are just really unfair, but it tends to be a term or art in caselaw and usually means contract terms that violate some public policy the courts are willing to enforce.

I imagine some argument could be made that the frequent flyer program terms of contract involve fraud, in the inducement or formation, rendering them unenforceable. I think it my also be possible to make a claim for damages for fraud based on the marketing of frequent flyer programs, i.e. that the big splashy advertisements imply that you will be able to fly to Antigua in February and the reality, hidden in fine print, is quite different.

A quick google search of the terms "lawsuit fraud frequent flyer programs" shows that at least some suits have been brought. Of course, any of these alternatives means going to court, and the cost of litigating this for the individual frequent flyer is much higher than the value of any lost miles. For the airlines, the opposite is true. It somewhat surprises me that no enterprising state attorney general has brought such a suit. Maybe there are federal preemption issues that have prevented it.

Anyway, these are just musings. It would be interesting to hear from a lawyer who actually litigates these sort of fraud/consumer protection cases.

sbm12

I'm still trying to figure out why anyone wants to sue the airlines to be able to sell their points. If you don't want to use them within the scheme of the programs then just don't collect them. The thought that there is real value being held hostage by the programs and that the value can be extricated from the actual program somehow is very entertaining to me. I just don't see it.