What Airlines Look for to Crack Down on the Sale of Miles

Last year I wrote what to do if your frequent flyer account gets audited.

Here’s a link to a series of presentations on fraud from an airline’s perspective.

In particular, reading through a 2011 powerpoint presentation from American Airlines, here are things they look for:

  • Same email address and/or telephone number used on multiple frequent flyer accounts
  • Booking of last-minute award travel
  • Change to travel dates shortly after the ticket is issued
  • Origination/destination not same as the program member’s address on file
  • Confirmation email address does not match program member’s email address on file
  • Logging into several frequent flyer accounts from the same IP address

These things don’t inherently signal fraud, often phone numbers will be the same within a family (but do the addresses match?). But they’re still flags for the airline. Last minute travel is sometimes the best value for miles, and can help someone out in an emergency situation (like a funeral).

Flying between cities that aren’t my home address on the account is something I do all the time, but if you’re gifting tickets to people In other cities those can be tickets you’ve sold through a broker.

Consequences for selling tickets through a broker can include:

  • If an authorized travel agency is involved in brokering FF mileage credits and/or mileage award tickets, your carrier might explore whether a debit memo is a remedy
  • Termination of the authorized travel agency’s appointment with your airline if appropriate
  • Litigation with FF Brokers (including authorized travel agencies) may be a remedy
  • FF Members using award tickets and/or upgrade awards sold, purchased and/or bartered might be penalized as allowed under your airline program
  • Termination of employment if an employee of your airline is involved with FF Abuse
  • Criminal prosecution
  • Confiscation of FF award tickets when FF Abuse has been identified
  • In general criminal prosecution isn’t an option unless there’s actual fraud, it isn’t illegal to sell miles, it’s only generally against the terms and conditions of a program and you can have tickets cancelled, miles forfeited, and accounts closed.

    Here’s how to protect yourself.

    (HT: JonNYC)


    About Gary Leff

    Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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    Comments

    1. Hi Gary,

      How can one gift miles to a non relative? I would like to donate miles to an organization that will use them as part of a fundraiser.

      Thank you,

      PS – I am a fan of your blog. And work on television, too.

    2. I notice you don’t mention upgrades – are these on the radar? Because I have occasionally used SWU, eVIPs, etc. to upgrade friends and relatives who have different last names and addresses.

    3. @Boraxo: I’ve been asked for agents about how I know the recipient when gifting AA SWUs. For all I know, they log this and then review the reasons given when they have suspicions about an account.

    4. I was a mileage broker from 91-98. I dealt almost exclusively with low value tickets , and never had a single ticket pulled.
      The airlines were looking most critically where tickets were issued to thrid parties traveling from random cities and flying first class overseas. heck, you used to have to be a relative to use a Medallion member’s miles.

      The matter had been adjudicated repeatedly, and that’s the main reason I left that business. It’s well-established law that the broker is committing “tortious interference” with the contract between the airline and frequent flyer.
      This being said, if you don’t sell a lot of tickets , you are not likely to have a problem. As a broker I never had an issue with an international ticket because I made travelers aware of the airline’s rules.
      I also was not doing enough international business and first to get on anyone’s radar.

      There is an extremely interesting case that anyone having the time should read. It’s about Rae Jean Bonham, an Alaska ticket broker also running a giant Ponzi scheme, taking investors and promising them large returns from the ticket sales. Generally not good to run a Ponzi where the investors include the state attorney general and the mayor of Fairbanks.
      The bottom line is that you don’t want to be selling miles (caveat: Southwest at the time didn’t care about it’s coupons being brokered), you are not going to get enough money to make it worth losing all your miles. The people still in this business are newbies who don’t know the case law or worse don’t care.
      http://en.wikipedia.org/wiki/World_Plus

      The court case against brokers who dealt with her resulted in millions in judgments.
      My conclusion is that if you really only have one airline to fly because you are at their hub and they have your loyalty for that reason, I’d never consider this. Imagine being stuck flying around with no miles earned.

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