SCHUMER CALLS FOR FIRST EVER RULES TO PROTECT NEW YORKERS FROM LOSING THEIR FREQUENT FLIER MILES -- AIRLINES BILKING FLIERS OUT OF BILLIONS OF DOLLARS WORTH OF MILES EVERY YEAR
Current Rules Allow Airlines and Credit Card Companies to Terminate Accounts and Rescind
Unused Miles Without Notice or Reason- Even Charge Sky-high Fees to Have Your Own Miles Reinstated
Schumer Calls on the Department of Transportation Draw Up New Rules to Protect Consumers, Investigate Airlines to Determine if They Are Engaging in Deceptive Business Practices
Estimated 2 Trillion Miles Could be Lost
On Tuesday, U.S. Senator Charles E. Schumer urged the Department of Transportation (DOT) to, for the first time, regulate frequent flier programs at commercial airlines. Schumer said that New York travelers and fliers all across the county have lost tens of millions of miles because they have been rescinded by airlines and credit card companies. Schumer said consumers are not receiving sufficient notification regarding pending terminations of their frequent flier accounts or the miles they have accumulated. Fliers have found that their accounts can be terminated and miles can be deemed cancelled or expired with seemingly little to no advance notice from an airline. This affects a consumer's ability to make travel plans, which in turn can cause an undue financial hardship. Schumer also asked the agencies to draw up new rules to improve disclosure and set limits on when miles can be rescinded and accounts can be closed.
"As the holiday travel season approaches, we cannot let airlines and credit card companies continue to fly off with hard earned frequent flier miles," Schumer said. "When a consumer accumulates valuable frequent flier miles, they should not have to constantly worry that they are going to expire with little nor no notification from the airline. Playing games with frequent flier miles takes money out of people's pockets, plain and simple. It's annoying, it's unfair, and it has to stop."
There are an estimated 10 trillion unused frequent-flier miles in circulation now, worth some $165 billion. Most airlines won't say how many will expire without being used, but a few estimates report 20% or more of all frequent-flier miles may never be redeemed--in part because of confusing airline policies and scant notice of approaching expirations. When programs began in the 1980s, miles had no expiration dates. In the mid-1990s, airlines put a three-year life on them--each mile would expire if not redeemed within three years.
Airlines currently have the freedom to close frequent-flier accounts with little or no warning, leaving many travelers who believe they have accumulated hundreds of thousands of miles high and dry. For instance, different airlines have different rules for when they can cancel an account. Some cancels after 12 months, and charge $50 for reinstatement, and others cancel the account after 18 months and charges 1.25 cents per mile plus a $25 fee for reinstatement. The biggest problem with the account cancellations is that consumers are given little notice when their accounts are on the chopping block. Many airlines stop sending statements to customers before their accounts expire, making it very difficult to track their miles.
Commercial airlines may claim that frequent flier programs are a free benefit, which can be terminated at any time without advance notification. There is reasonable likelihood that consumers have actually paid for the frequent flier programs and miles through other purchases, like airfare and additional fees associated with air travel.
To protect consumers, Schumer called on the DOT to investigate whether or not air carriers are engaging in deceptive business practices. In making this determination, Schumer says that DOT should examine both the accounting statements and the frequent flier agreements of the carriers who operate frequent flier programs, in order to determine whether the airlines have treated these miles as having been purchased by consumers as opposed to being gifts from the airlines to their consumers as a reward for their patronage.
Schumer also asked the agency to draw up new rules to improve disclosure and set limits on when miles can be rescinded and accounts can be closed.