I asked readers to share what’s on their mind and one reader mentioned their American AAdvantage account was being audited, another commenter speculated that this first reader had sold frequent flyer miles.

I’ve given advice on how to handle this subject before, but it’s a great idea to be aware of what loyalty programs look for, determine your own risk tolerance, and know how to stay on the right side of their auditing departments.

Here’s what airlines look for to crack down on the sale of miles, which while not illegal is against program rules — the account holder can have their account closed and all of their miles forfeit, the travel can have their tickets cancelled and can find themselves stranded.

Why Loyalty Programs Restrict You from Selling Awards

Most airline and hotel programs will let you use your points to let someone else travel. Some programs are restrictive, letting you only redeem for family and making you even prove the familial relationship.

Still, they don’t want you selling awards. Airlines want to be the sole brokers in their own miles. And selling awards might mean someone that would otherwise have purchased a ticket with cash gets an award ticket instead, costing them revenue. Plus award sales increase the total portion of points redeemed, it reduces the program’s ‘breakage’ and raises costs.

And whether for airline or hotel programs there’s only a limited inventory to go around. More points redemptions means it’s harder for the program to satisfy the demands of members.

How Easy Is It to Get Caught?

Selling awards on eBay or Craigslist is a bad idea, some programs have been known to pose as buyers to bust whomever is doing the selling.

Selling awards through a broker is a bad idea, because you likely won’t know the person who is actually traveling (increasing the risk of getting caught, and that person has no incentive to help you out) and because if the broker gets caught then anyone they work with has their account in jeopardy.

Getting audited isn’t common. Usually when they contact you it’s because there’s a pretty strong indication that you have broken rules. The flip side is that folks who aren’t breaking rules don’t often come into contact with a frequent flyer program’s auditing department. Either way it’s helpful to know what to expect.

Which Programs Are Most Likely to Audit You?

United and American have historically been aggressive tracking down members breaking program rules this way. US Airways wasn’t very active until 2010 but began investigating plenty of accounts especially after the 2009 holiday shopping promotion that many members took advantage of to buy an unlimited number of miles at 7/10ths of a cent apiece. I’d expect audits to pick up further with the American Airlines merger.

Hotel programs are usually far less aggressive than airlines, their awards tend to be a bit lower value and less subject to black market trading. But IHG Rewards (formerly Priority Club) has certainly been known to audit and shut down accounts that earn points fraudulently. And Starwood has shut down accounts that abuse the feature to transfer points between members living at the same residential mailing address — since some folks have used this to trade airline miles, changing account addresses to transfer points from person’s one account to another and then on to that second unrelated person’s airline mileage program.

What Will Trigger a Fraud Review?

Here are the kinds of activity that most frequently draw the scrutiny of fraud departments of mileage programs. While not an exhaustive list, these are some of the biggest factors:

  • premium class international award redemptions for other people, especially several in a short period of time.
  • heavy mileage earning from a single partner or source
  • one or more of the above across multiple accounts accessed from the same computer or IP address
  • sponsoring upgrades for multiple different individuals
  • selling awards

When there are especially rich bonus opportunities, and members load up on miles quickly, airlines sometimes take notice and look carefully at whether the miles are being used to obtain high value awards for unrelated people.

What Happens When Your Account Gets Audited?

If you’re contacted by a program about irregular activity in your account, the account will often be ‘frozen’ during the review period. Or you may just find that your account is frozen without any contact from the program at all.

It can be difficult getting responses and answers from the program, they’re going to act on their own timetable and in most cases there’s little that can be done to goose the process.

What’s more, front line customer service agents probably won’t have answers, information will be held by the group that actually does the auditing and those folks aren’t usually easy to contact.

That’s a huge inconvenience for members acting within the rules of the program who want to use their miles.

The program may have questions, or ask for documentation about certain transactions, and if they can’t convincingly demonstrate that you’ve broken the program’s rules your account will likely be unfrozen.

The Scariest Audit: In Person Confrontation During Travel

Folks have had tickets voided and have even been met during travels by airline personnel. Those are cases where a program thinks pretty convincingly that they’ve ‘got you’.

Here are the sorts of questions that might get asked when met at the boarding gate:

  • How did you upgrade/pay for the ticket? [Do you know you're on a mileage upgrade or award ticket?]
  • How much did you pay for the upgrade? [trick question, gets you to admit you bought the upgrade in violation of program rules]
  • Who sponsored you? [Do you actually know the person whose miles covered the trip?
    • How do you know this person?
    • Do you know where this person lives?
    • Do you have a contact number for them?

The airline wants to know if you really know the person who provided you the miles or upgrade instrument. And it’s why when I gift an award to someone, I often give them a letter or card as well to bolster the evidence that indeed it was a gift within program rules, that we know each other, and that nothing was sold or bartered.

When You Care — and When You Don’t Care — if Your Account Gets Audited

At the point where your account is audited, it’s too late for me to offer the advice not to do anything against a program’s terms and conditions with an account where you want to have an ongoing relationship with the program.

If you are an American Airlines Executive Platinum and plan to keep flying American (and have a significant mileage balance), it usually doesn’t make sense to sell an award or an upgrade — you have too much to lose.

On the other hand, the stakes are much lower with an orphan points account you don’t plan to use going forward, since except in the most extreme cases (criminal conspiracy), the most that will happen is you’ll have your account shut down and you’ll be asked not to fly an airline or stay with a hotel chain again.

If you’re mid-trip though, or someone you sold miles to is mid-trip, and an airline determines the ticket was acquired in violation of their rules, the ticket could get cancelled. A passenger could be stranded or face a big cost to get home.

When Priority Club was giving out points for downloading their shopping toolbar, it turned out that you didn’t actually have to complete the download to get the points and you could earn the bonus over and over. I didn’t write about it when that ‘deal’ was live because I didn’t want to risk my readers’ accounts. I knew that Priority Club would notice this come Monday morning, and people who did it would have their relationship with the program terminated.

Your individual risk tolerance for an audit and these sorts of consequences should always be in the back of your mind when pushing the envelope with a program.

What Should You Do If Your Account is Audited?

Assuming you have something to lose, and that you’d like an ongoing relationship with your travel provider, the best advice is:

  • Get contact information if you can for the audit department. If you can’t, find out when you’ll hear from them. Follow up.
  • Find out which transactions the program is questioning
  • Gather all of your documentation surrounding that transaction
  • Be honest. You were flagged for a reason, the program won’t tell you everything, and denials that run contrary to established facts the program is aware of will just get you in more trouble — they will act more punitively. More importantly, inconsistencies in your story may lead to scrutiny of your entire account history, not just a few transactions.
  • But don’t be too forthcoming. Answer what’s asked of you, but don’t volunteer anything that isn’t specifically asked.

If you’ve broken program rules, offer a contrite apology. You might lose some points, you might even be asked to pay the cost of a ticket that was obtained contrary to program rules. But unless your conduct was large scale and ongoing you’ll probably be invited to continue participating in the program.

You might be asked to ‘name names’ if the program believes you’re working with a broker. Cooperating likely gets you a better deal.

Have you ever had an account audited? What triggered it? How was it resolved?


  1. michael said,

    Re IHG.Booking a hotel with cash+points and then
    cancelling the booking,is this legal or not ?
    Michael

  2. E said,

    US Air Dividend Miles account audited for partaking in the share miles promo too much – family member had 2 accounts. but it was discovered by accident when i asked US Air to merge the accounts – dumb move. another time, when there was a schedule change, i had to call in to have them update the ticket and i gave both itineraries (booked from accounts with same names – got one ticket cancelled by US audit team the next day and never got the miles back).

    how aggressive is United really?

  3. Corky said,

    Can you elaborate on “heavy mileage earning from a single partner or source?” Why does the airline care what the source of the miles is, and how is that a violation of program rules?

  4. SH said,

    About ten years ago I successfully sold about 300,000 US Air and American Airlines miles on eBay. When I later tried the same on Craigslist, US Air posed as a buyer and followed up with a very nasty warning email threatening to close my account. I don’t think I was ever audited though (at least not with my knowing it) and I had no trouble subsequently redeeming miles for myself.

  5. Gary said,

    @Corky – that’s not against the rules, it’s just a flag that might trigger them to look closely at your account. It could be that miles are coming in by nefarious actions with that partner, or even the partner abusing their relationship (partner contracts include all sorts of limitations on buying miles for your own account).

  6. Gary said,

    @Michael I haven’t seen folks have problems doing this but at a certain volume it could draw attention and make IHG more than a little unhappy. You want to stay below radar and not scale that I would think!

  7. David said,

    I was recently audited by AA. It’s not a pleasant process. They took away about 120,000 points. From what I’ve heard, they are definitely becoming more aggressive lately. A lot of brokers no longer buy those miles…I suspect because they were “caught”.

  8. Belinda M said,

    What’s wrong with someone “gifting” me a substantial number of miles, and in return I “gift” them something they really want, like a flat screen TV or a new MacBook?

  9. Greg said,

    I got a nasty letter. I posted a trade on coupon connection – but nobody wanted to trade.

    They said I was trying to sell my system wide, and will remove them from my account.

    So they can take away your points/upgrades just for ‘saying’ you want to trade, not even trading.

  10. peachfront said,

    I think when I have lived with someone for three decades, AA should be able to figure out that he’s my husband and he’s allowed to buy me a ticket with miles. Nonetheless, on my last trip, I got the third degree. How do you know him? Erm, he’s my husband. Where does he live? Erm, in our house, same address that has been in your computer for lo these many years. Ya know? I have no problem with American or anybody else “auditing” an account if they actually had a reason. But I was questioned for a good 15 minutes for no good reason except apparently a sexist clerk who thinks it’s 1814 and wives should give up their own names. “Aggressive” about catching wrongdoing is one thing. “Aggressive” about trying to stop spouses from sharing miles is just plain wrong.

  11. traderprofit said,

    As a former ticket broker who quit in the 90′s when I saw the writing on the wall, I can’t believe brokers are still around.
    The matter has been litigated and is well-decided law. A broker buying miles from a freq flyer is committing toetious interference with the airline’s contract with the frequent flyer. I didn’t do many international tickets but I ALWAYS made sure the buyer understood what was going on and who the seller was as well as some basic info).
    I can tell you by far the biggest tell is international premium class tickets issued repeatedly to people with different last names where the ff is not also traveling.

    I would not dream of selling my own miles. The rates paid just don’t justify selling versus using the miles,They even further don’t justify getting caught.

    Honestly, if you think the airline has you trapped and you have a large mileage balance, I’d hire a lawyer and “give up” whatever info is necessary to save your account and status.
    When you dealt with a broker in the 90′s you were almost 100% of the time dealing with an honest businessman, and the law had not been completely decided. Today, I can’t believe the google ads I se from brokers.
    Anyone who sells to them is begging to have their account closed. I have called a few just out of interest to see their level of knowledge of the business and law, and it’s very weak.
    Anyone who sells miles should read the case of Rae Jean Bonham (she even has a wiki) Delta own a $9 million judgment and I am sure got the names of all frequent flyers selling miles (back then you had to be a relative to use someone else’s Delta miles).The cases spawned from Bonham;s acts were just terrible . Google her name with Alaska and read the wiki to find out how what seems like a simple sale to a local broker can end up being a nightmare.
    On the other hand , if you are about to file bankruptcy and need the money, or you are sick and need the money, or for a criminal defense case ,I can’t blame you or even call you ill-advised.

  12. Justin said,

    One thing I don’t get is how can they unilaterally cancel ticketed reservations because they determine–based upon an investigation that nobody could consider “independent,” and based on evidence that would not necessarily be legally admissible–them to have been booked against program rules.

    I understand that you leave any mileage *in your account* at their mercy as they reserve the right to take them away, freeze your account, etc, but tickets that have already been paid for should be covered by DOT regulations, no?

  13. peachfront said,

    @justin Exactly. If the airlines know what they’re doing when they “investigate,” it’s one thing. But to use the fact that you have different last names as evidence of wrong-doing is just plain sexism when both people have the same address and have for literally decades. It’s 2014. I should not expect to be interrogated when my own husband buys me a ticket. Absolutely no excuse for it. If they’d truly had any questions, they had weeks in advance to contact me, my husband, or both of us at our home or his office to answer their concerns about the ticket they issued. Waiting until I’m checking my bag is just plain dishonest and makes it appear as if they’re looking for excuses to cancel tickets so they can double charge people. I would like to know if this has happened to anyone else. If it’s a one-off by one sexist clerk, it’s one thing…if it’s a pattern, it’s another thing.

  14. traderprofit said,

    @Peachfront If the security department is truly reduced to questioning people at the gate who have repeatedly used the same frequent flyer’s miles, I’d be upset too. Did they at any time tell you they were not going to let you fly if you didn’t answer their questions?
    If your husband had not been selling miles to anyone and only gave them away, I’d ask them for ID and card, get their names, and tell them you will not answer their questions unless they are related to the security of the flight, that you do not discuss your personal relationships with strangers. If you are willing to call their bluff and your hubby hasn’t done anything wrong, the negative publicity would work for the greater good. Sort of sounds to me like you were facing the inquisition from some poorly informed people on a fishing expedition. There are plenty of ticket brokers advertising on google they can outright sue , and get all the names of the frequent flyers they deal with. So, there is something missing in this story.

  15. Sweet Willie said,

    be aware that airlines go fishing sometimes. twice in past I’ve had airlines call me with very aggressive fraud agents that raised their voices, accused me, threatened actions. Long story short, in both cases it was a voucher that was issued to me by the airline and the issue was dropped.

  16. Doctor Of Credit » Sunday Collection: Best Posts For The Week Ending April 20th said,

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    […] you booking multiple AP rewards to non related people in a short period of time. OP, I would read this article from View from the wing. Some good advice. The fact that some of the people who you booked […]

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