The DOT Wants to Clamp Down on Forums and Blogs Spreading Mistake Fares and Having them Honored

The Department of Transportation posted its notice of proposed rulemaking (and thus opened the ‘comment period’) on changes it wants to make to consumer protection rules.

But one nugget is included of interest to ‘travel hackers’ that could actually weaken their protections.

Cranky Flier reviewed DOT’s plans for making airline fees more transparent, even on third party aggregator sites like Kayak and Google Flights. Today he went back to those proposed rules and called them not terrible.

Cranky pointed out something that actually got me to read the proposed rulemaking.

DOT defends the policy of requiring airlines to honor mistake fares, but also calls out “bad actors” who are buying mistake fares in “bad faith.”

The rulemaking reveals the Department of Transportation’s intention to weaken one aspect of existing consumer protections.

The DOT has required airlines to honor prices, even when those prices were a mistake (14 CFR 399.88). They wanted air carriers to own their prices no matter what.

They didn’t require United to honor 4 mile award tickets to and through Hong Kong, but United displayed the ‘correct’ price throughout the booking process and only dropped price at the end.

This tilted things in a really strong direction for consumers overall. It also upended the traditional notion of obvious mistake, that no contract could have been formed if parties didn’t actually intend to strike a bargain at a particular price.

Of course in travel there are crazy prices, bargains that turn out to be much more expensive than planned when all fees are included. Spirit advertises a $9 fare club, and offers lower fares than that even — of course they have also had fees to issue tickets except at the airport (web convenience fee), to issue boarding passes at the airport, for carry on bags, etc.

In a world of $9 and under airfares legitimately offered, how can consumers be expected to discern which prices are real and which are in error? And let’s not forget $2 a night ‘easycruise’ offerings.

So it’s murky. But the Department of Transportation is sympathetic to airlines making mistakes again. And they are calling out blogs and frequent flyer forums.

The DOT is also considering exempting US connections from their rules. Consumers would only be protected on itineraries originating or terminating (or stopping for 24 hours or more) in the US and not merely connecting enroute to a third country.

This would explicitly exclude fares like the Yangon first class mistake fare that Swiss didn’t want to honor which merely connected in the US (and many passengers intended to get off) enroute to Canada.

I have no idea how the Department of Transportation is going to write a rule that would parse whether a fare was obviously a mistake to a consumer or whether a consumer was duped by a good deal that the travel provider tried to raise the price on later.

That’s going to be interesting to watch, but will end up weakening consumer protections no matter what they do (which many will say is reasonable) since it’s going to be fairly impossible to exclude cases of ‘consumers taking advantage of airlines’.

When an airline offers a deep discount sale, genuinely and with intention, if it’s actually a good deal it’s going to spread through social media. The mere discussion of the fare in frequent flyer forums is insufficient to demonstrate that a fare was known to be a mistake. Though I certainly intend to be more circumspect in the future and not offer my opinion that something might be a mistake.

And surely, my opinion on a blog — without knowledge of an airline’s actual strategies — is hardly dispositive. The late Independence Air actually once loaded a mistake fare on purpose, in the middle of the night. THey wanted for a few consumers to book it, and then reached out to the Washington Post themselves to declare they would honor the deal (‘you never know what kind of great deal you’ll find on our website’).

What do you think? Is it possible to require all fares to be honored, while giving airlines an ‘out’ for mistakes that consumers are taking advantage of (benefiting ‘too much’ from)?

Parsing this reminds me of anti-trust, where prices that are too high are exploitive of consumers; prices that are too low are predatory against other competitors; and prices that stay the same (‘don’t respond to competitive pressures’) are indicative of monopoly pricing power.

Can consumers know when they’ve hit on a ‘Goldilocks fare’ that is just right?


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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  1. One of the few (and most interesting from a legal standpoint) “mistake” fares that I was able to take advantage of in the mid 00’s was a deal NW had between LAX and HNL. The deal was for “$400 off an air/hotel package.” Usually, those types of promos are loaded with restrictions, ie 2 people traveling and a minimum stay.

    Not this one. I got RT airfare from LAX-HML one night in a hotel (and a red-eye home) for $80.

    NW certainly intended to load that fare. What they forgot to load was the fine print.

    What would the DOT say about that?

  2. Gary,

    To answer your question, we’d have to be experts. Which really shoots many legal arguments out of the water when a “reasonable person” test (or whatever the correct term is) is involved. By definition, us experts aren’t the median person that would satisfy the test, so therefore, we can’t be the standard to which many of the rules would like to hold us to.

    Name me one Joe Schmoe who buys a zero-fare ticket with $600 in YQ who thinks he got a ticket for nothing. (IIRC, this was close to the basis on which BA was offering tix to India and renegged.)

  3. “The DOT is also considering exempting US connections from their rules. Consumers would only be protected on itineraries originating or terminating (or stopping for 24 hours or more) in the US and not merely connecting enroute to a third country.”

    They area already enforcing that.

  4. Agreed! I would imagine a good lawyer, (or even a mediocre one) would be able to build a strong first amendment case for blogs and forums sharing fare information.

  5. It is not a free speech issue — it is whether the airlines need to honor fares or not. I have flown on mistake fares. But I have paid more then I have saved paying cancellation fees to the same airlines…. some of which have been my “mistake.”
    This is the result of consolidation in the industry and airlines putting pressure on the DOT. I hope they not successful.

  6. Eh, I’ve had a very good let’s just call it “ahem” L education? How in the world does the DOT who is neither a party to the offer and acceptance of a contract determine unilaterally that bona fide purchasers of an offer of travel are doing so in “bad faith”?

    Sounds like the most absurd “legal” explanation of anything I’ve ever heard in my life, and I’ve heard quite a few doozies from government agencies before.

    It’s simple offer and acceptance. Where’s the bad faith?

  7. I don’t want to get into the first amendment or any constitutional issues. Simply from a Contracts standpoint, I’m completely confounded. Where is the bad faith? Point it out to me because I’m not seeing it.

  8. To be clear, they don’t want us not to be able to talk about it (prior restraint on our speech), they don’t want the deals we publicize in social media, taking advantage of the airlines, to have to be honored.

  9. DOT wil do whatever they want. They will continue to enforce the 24 hour stop regardless. I’m 100% sure they will amend the rule on that portion as that is what they have been enforcing now.

    Who really should get to decide what fare is a mistake and what isn’t? If its published on a blog, DD, FT, MP doesn’t automatically make it a mistake. People like to call every cheapo fare a mistake. I think it leaves too much up to interpretation. I hope if they do this they at least give a hard deadline to declare something a mistake.

  10. I like the naivete of the DOT thinking that grandma just happened to stumble upon a $29 fare to Europe and bought it thinking it was a real fare. I suspect those people number about 1% of the “mistake fares” sold.

    But, of course, what’s a mistake fare? When Big Airline offers a $79 transcon fare from Other Big Airline’s hub, it’s probably not a “mistake” — but it’s not really a fare that Big Airline wants anyone to buy. It’s primary purpose is likely to tell Other Big Airline to stop doing something it doesn’t like. Big Airline is basically being a “bad actor.” That’s just the way human beings often behave.

  11. And the longer I get to actually ponder the implications of this, this absolutely reeks of collusion and Antitrust. You can not possibly have a standard price for things and then claim when someone purchases the item below what you consider to be the standard price without some form of collusion on pricing and inherently inferentially ANTITRUST.

    You can’t possibly say that XYZ route should cost a minimum of ABC and anyone who buys it below that figure “should have known” that this fare was a mistake without inherently participating in collusion to set minimum prices in a market. Free markets do not operate that way. Free markets are free for sellers to offer their product at an asking price and buyers are free to either accept or deny their offer. When a seller makes an offer that after a buyer purchases it they deem to have been too low, it is expressly against all good logic and valid legal interpretation to then allow that party to simply nullify their commitment because they have now deemed their initial offer to be in error.

    That would be like someone listing a home for sale with a realtor. And then when a party purchased the home, showing up at closing claiming well I never meant to offer it for that price. I was mistaken. Or like an auto dealer publishing in the paper a unit for 10,000 and then when someone showed up cash in hand, the dealer then saying well we meant to say it was 12,000.

    Incorrect, and yes people try this stuff all the time but the BUYER Is not responsible for the publishing of the offer, THE SELLER Is. All offers in terms of how much the fare costs are solely within the discretion and control of the SELLER. If the buyer accepts the seller’s offer, it’s simple contract. The Seller is obliged to follow through with the agreement.

    There is absolutely no bad faith involved in this in any way whatsoever. No one has intentionally went into the seller’s system and forced them to publish a low offer. No one has defrauded or deceived the seller of anything in order to get their products under false pretense.

    This is the most repugnant nonsense I’ve seen in print in the past 10-15 years and we’ve been forced to live through a heck of a whole lot especially since 2008.

  12. @iahphx – my thoughts too. When is a mistake fare a mistake fare? Obviously a $10 flight US to Asia is a mistake. What about $200 or $400? I bought NYC to Japan for $500 from Delta. I dont think it was a mistake but just a good deal (but then came the disaster about a week before I was supposed to leave so luckily I got a refund).

  13. Classic Americans, always yipping about their rights.

    You do realize that almost every mistake fare leads to a revenue manager being fired, right?

  14. Give the airlines AND passengers 48 hrs. to cancel a booking. That would put everyone on equal footing!

  15. I think this is all for a show. Let the Feds march out what they think they can get away with, meanwhile taking orders from the airlines. What it will come to is, mistake fares will be rescind-able at the airlines’ discretion. The consumer will lose.

  16. LOL. I read it. Well…they are “soliciting comments”. Gary, are you going to attend the congressional hearing? I see the point about the mistake fares, but the US Gov should go after Google for their crimes, not blogs.

    P.S.: Keep those great travel reviews and pictures coming. I’m reading the Male one.

  17. The only effective way is to limit the number of tickets to be honored that were booked using a ‘good deal’: if the airline can show that number of tickets issued spiked ways beyond normal booking behaviour, they should be able to kill the deal.

    a) all bookings have to be on the same routing/date
    b) deals have to be cancelled within 24 hours
    c) no advertisement by the airline for that fare

  18. Hey Joel– The DOT doesn’t care when we make a mistake. If there’s an error in the name on ticket, or the date, or whatever you’re hit with huge fees. But any so-called “mistake” fare is something the DOT wants to stop us from speaking about. Doubleplusgood comrades.

  19. As a retired federal regulator (banking, not DOT), I can see a lot of people have little understanding for the regulatory process or the law. I’m sure this will be an unpopular statement, but my intent is merely to educate and not to judge.

    First of all federal agencies are required to balance the rights of the regulated businesses (be they airlines or banks) with the rights of consumers. A common standard is what a reasonable person would think or believe. So whether a fare is a mistake or not would depend on the circumstances. Gary is right when he notes that a deliberate mistake fare was loaded as a gimmick; however, this was a one trick pony and outside the norm. Would the new standards get everything right – of course not, but it would take care of most situations when there is most likely a mistake.

    Regarding good faith – that is a term defined by the courts and the legal system. A contract requires a meeting of the minds – that both parties intend for the contract. This would favor the airlines in the case of mistake fares since they would content that the fare was not intended. Like it or not, the courts have generally ruled under contract law that if there is probably a mistake, then there is no contract. Note the word probable – this means more likely rather than less likely (or 51 percent). Some believe that airlines would then print up false fares and then change them after hoodwinking the consumer. In reality, does a reasonable person believe that a business would do that consistently and continue to get away with it? That would be bad for a business as far as reputation and repeat customers. Also, going back to the good faith issue, a series of actions would make the DOT believe the airline is not acting in good faith and the agency would then take appropriate action (i.e. fines, restitution to consumers, require the fare to be honored, etc.)

    With regards to how to decide whether a fare is just low versus a mistake, I would venture a guess that there will be some margin as a standard. For example – if the lowest fare offered on a route for the past year is X, then anything greater than 10 percent (or 20 percent or 30 percent) would be considered a mistake fare. An example of good faith would be the airline advertising the low fare, not simply loading it for accidental discover.

    In any case, DOT is required to print any proposed regulation for public comment. Save your comments for when that occurs. Telling DOT now doesn’t do really do anything if it is outside the comment period. Provide a well reasoned argument for what you want. As much as people seem to dislike regulators, I can tell you that all comments are considered. I have been involved in changing bank regulations and this is what I have had to do.

    You can also contact your congressional representative, who is responsible for the laws outlining what DOT can or cannot do.

    As a regulator you walk a line. If no one is happy, then the agency has probably found that line.

  20. @ Jana

    As a banking regulator, you should recognize the problem more acutely than anybody.

    Following the 2008 banking collapse, and the regulations that ensued….consumers have come to believe the game is rigged, and they’ll never get a “fair shake”.

  21. Look at some of the most publicized recent mistake fares: AZ (a couple of weeks ago to MXP), AA (a couple of weeks ago on US metal), Wideroe (in November). In all of those cases, everyone getting in on the “deal” paid the base fare and all taxes, but the YQ wasn’t applied. It would be interesting to see how they’d handle that, as the carrier would be adding an additional charge rather than raising the actual base fare (which was undeniably correct).

    Also, how is the average consumer supposed to know what a good deal on a ticket is and what a mistake fare is?
    BOS-SAN-BOS for $208 works out to $0.04 per mile, and is a fare that comes around a few times per year (as not a mistake)
    BOS-LHR-BOS for $262 is also $0.04 per mile, but would be touted as a mistake fare

  22. Excuse me @Joel, yipping about our “rights”.

    Do you realize that without our so called rights you’d probably be living in either a Muslim controlled fatwah , ( and I have absolutely nothing against practicers of Islam and condemn those who are trying to twist what happened at the white house yesterday politically) , OR you’d be marching in step with the Aryans.

    And the very least you’d be farming soon to be King William’s land.

    Your “rights” as an American are exactly what makes you American.

    Nobody is yipping because you feel the need to constantly be taught how this whole thing works in reality.

  23. excuse my proofread, obviously meant practitioners, mind faster than fingers lol

  24. Oh and who exactly is standing up to protect my right to future economic prosperity? You’re claiming that by purchasing a legally offered airfare, I’m putting people out of work.

    That’s absurd.

  25. you all can bitch and moan all you want to about $4 fares being legit but you know when it’s that low then it’s a mistake and ridiculous to threaten companies to honor. when it’s THAT far off, you have absolutely no reason to complain if not honored.

  26. @Jana I appreciate your attempt to tackle the issue “legally” hiding behind the idea that there has been no “meeting of the minds” since the claim is that the Seller did not INTEND to offer the product at that price, however you have one very weak link in that argument.

    The “Seller” is the one who formed this method of publishing the offer. My rudimentary understanding is that fares are loaded into a database created by an organization known as the IATA. I’m unsure of the exact wording but I’m sure it standards for something along the lines Of International airline trade association. So these folks with a common interest got together and figured out a method whereby their offers would be published for sale.

    Note that at no time did the buyer have any input into the agreement. All they have been given is a figure and a promise of transport.

    The traditional concept you wish to cite is not applicable here because as you put it there can never be equal footing between the parties.

    A contract of carriage is riddled with terms protecting the issuer under all sorts of nonsense and is automatically given to the seller in this instance due to their substantial investment etc.

    This is what I can offer you. A peek into the future. If the IATA and the American airlines who are behind this effort do not cease and desist immediately, then you can absolutely 100% guarantee that foreign carriers will be permitted to operate in US airspace in the next few years.

    They can’t see beyond their own goals. Go ahead. Push the issue. Watch what happens.

  27. One sided negotiations such as “Non refundable” fares, Selling phantom routes, insulting your customer base, attempting to provoke your best customers, playing yourself off as some nasty high school cheerleader, publicly insulting whole sections of the country, and basically just talking so much S#24 your gums won’t stop flapping.

    You want a fight? You can guarantee you’re going to get one.

  28. Oh and if HEAR One more airline “leader” refer to the employees of the airline in direct opposition to the CUSTOMERS of the airline who pay the fares as “their” people.

    I’m going to personally pay a visit to whatever meetings will be held and figuratively bi5ch slap the hell out of them until the are publicly flogged.

    YOUR CUSTOMERS ARE ” YOUR PEOPLE” dumb a#$%

  29. I don’t think it’s “bad faith” to want to book a flight to Europe for $50, $100 or $1,000. It’s also my Constitutional Right to talk about it with anyone I’d like. Typical of this administration. It’s hard to turn the socialist train around I guess.

  30. Well since I’m on the “RANT” and I know you enjoy it so I’ll continue. This is self indulgently fun no matter who gets the message

    Ok do you want examples of “bad faith” ? Bad faith involves abusing the screening process designed to keep your seat mate safe from foreign attack and using it as a source of data mining.

    Bad “faith” involves attempting to categorize your paying customers into groups not unlike cow herds and then attempting to design different pavlovian bells designed to get the herd to step to the left, step to the right and do the hokey pokey.

    Bad faith exists when you look out on your horizon and start thinking from your office that all the people you meet each day have a commonality and it’s your job to over categorize them and place them into a neat little file drawer.

    Bad faith exists when once you’ve been paid for a service you then attempt to play silly 3rd grader games involving how “you’re not that smart”, and you need things to be much simpler and slow down.

    Simpler and slow down? You have their money. Simple enough. Oh it’s not enough for you? Why not go cry Bad faith rather than getting your act together in the first place.

    Bad faith is constantly blaming everything you don’t like around you on “other” forces.

    Need I continue? lol

  31. The airlines take advantage of customers all the time, starting with the fees assessed if a customer makes a mistake in the booking. This is not level ground as it is – it’s OK for an airline to take advantage of a passenger mistake, but not OK for a passenger to take advantage of an airline mistake. In the end, this is about revenue protection, not fraud.

    The airlines are simply using the regulatory process to their advantage. Happens all the time. No surprise here, either. My experience in regulatory agencies suggests that the writers of proposed rules would never use the term “fraudulent” to describe customer behavior nor come up with the construct on their own. This indicates that this clause was proposed & described by the airlines or their lobbyists (lawyers).

    If we’re going to regulate fares, let’s go all the way back to the pre-deregulation days where airlines have to apply for fares between cities. Eliminate the dynamic pricing – a lot of other problems, including the increase of fares/”this fare has sold out” during the booking process. Let the airlines file fares with the DoT 24-48 hours before implementation, where it can be placed on public notice. The airlines will NOT like that proposal, but it would rein in bad behavior.

    The airlines already impose “contracts of adhesion” that are very biased in their favor. Rule 240 is essentially gone. Most consumer protections are gone. And the airlines use TSA’s ID checking process for revenue protection.

    In the end, the airlines are pushing revenue protection. And using the government as their henchmen.

  32. @Jaymar01

    As I said earlier, what I posted would not be popular. As far as regulations go, regulations can only be made if the law makers (i.e. Congress) gives them the authority to regulate an area. In the case of the financial collapse, Congress declined to address the issue of predatory lending. Without a law to base a regulation, the regulators are not permitted to pass a law. I will also add that the Bush administration did not believe in regulation (preferring the free market system to control themselves), so those policies were in place. It’s a bit like your manager, president, owner telling you what you can or cannot do. Most of you would follow those policies or the law.

    I find the anger for what is a relatively rare issue quite interesting when there are so many more important issues in the world that need attention.

  33. @Montana Mike

    My thanks for your well reasoned discussion. What you are referring to is a unilateral contract, which is common with most business. Yes, you are correct you have little power because the contract is designed by the airlines to protect themselves. And yes, you are correct that the consumer has little recourse short of going to another airline or finding a different method of travel. In my opinion, these are effective reasons to argue with the DOT.

    I have no idea what the DOT would consider “bad faith” for the airlines or consumer. I merely speculate. As I said earlier, the airline can clearly demonstrate the fare is intended by advertising the fare, which is a pattern and practice of most airlines when offering special fares. Similarly “bad faith” can be construed when there is a pattern and practice of bait and switch. To the extent that people are harmed, there is always the route of a lawsuit. With the large number of attorneys seeking class action suites, a good or valid case would have little problem finding counsel. Given the relative lack of action or success with this type of recourse, I would guess most reasonable people realize that there really isn’t a case. Just my observations.

  34. @Jana.

    You wrote “Regarding good faith – that is a term defined by the courts and the legal system. A contract requires a meeting of the minds – that both parties intend for the contract.”

    In fact, it is not the contract, but the covenant of a contract. Other than that, you’re good to go.

    ED.

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