The DOT Guts its Post-Purchase Price Increase Prohibition to Help United Out of a Jam

Two weeks ago flights originating in the UK were pricing in Danish Kroner at a price that’s pennies on the dollar what they normally run.

You could fly from the UK to pretty much anywhere in the world in business or first class at price hovering around $100 or less.

This wasn’t a United-specific glitch, but United.com was the most common place to buy these tickets. United voided these tickets.

Thousands of Consumers Complained to the Department of Transportation

The Department of Transportation received thousands of complaints, apparently, and they’ve now ruled on whether United violated their rule against post-purchase price increase, which forbids cancelling tickets after purchase. And as I wrote that I expected, they’ve sided with United.

While the DOT promulgated a rule requiring airlines to honor tickets that have been purchased regardless of price, they don’t like that airlines have to honor tickets regardless of price — they want consumers unaware of a glitch to have tickets honored, but don’t want consumers to be able to take advantage when they’re aware of glitches.

DOT has been in the process of amending their rules to prevent requiring airlines from honoring mistake fares.

As a result, I was confident that DOT would read their rules in the manner they preferred — and let United off the hook. I considered it almost a certainty that United discussed and agreed with DOT on how to handle these tickets before they were cancelled.

How the DOT Got Around Its Requirement That Airlines Honor Purchased Tickets

The Department of Transportation has now posted its statement on the matter. (.pdf)

Their first argument is that since the purchase of travel by US consumers from a US airline between Europe and US was done by indicating a website country preference of Denmark, it was purchased ‘from a Danish website’ and thus this was not a fare marketed to US consumers. The DOT contends this means their protections don’t apply.

Here’s the money quote though:

[T]he Office is concerned that to obtain the fare, some purchasers had to manipulate the search process on the website in order to force the conversion error to Danish Krone by misrepresenting their billing address country as Denmark when, in fact, Denmark was not their billing address country. This evidence of bad faith by the large majority of purchasers contributed to the Enforcement Office’s decision.

(Emphasis mine.)

It’s because they don’t like consumer actions that they came to this decision (‘contributed to this decision’) rather than that the rules don’t actually apply to fares ‘not marketed to US consumers’. They’ve basically given up the game here: without this contributory factor, DOT wouldn’t have viewed the rules the way that they did.

The DOT rules don’t talk about or attempt to divine consumer intentions, they are straightforward rules that an airline have to honor tickets for which they’ve taken payment.

But the DOT as much as says here that because they don’t like the consumer conduct, they don’t like the outcome their rule would imply, they’ve found a reading to allow themselves not to enforce their rules.

This New Reading of the Rules May Have Unintended Consequences

The DOT should change the rules, they shouldn’t simply ignore their rules. And the back flips they’ve gone through, contending that any inaccurate consumer information entered during the purchase process allows an airline to void a sale is troubling.

For instance, ticket prices will often vary based on country of sale. It’s far less common than it used to be, but fares requiring ticketing in-country still exist. For instance, you’ll find lower prices for travel inside Asia when booking on Asian travel sites than you often will on Orbitz or Expedia. Here consumers simply worked around the clunky United website that didn’t allow for Danish tickets to be issued without entering Denmark as the country in the consumer’s billing address.

Fuel surcharges on a ticket may be lower purchasing two one ways than a roundtrip. Is a consumer considered being less than transparent with an airline when they fail to book the roundtrip (circumventing the airline’s fare logic), entitling the airline to an add-collect at check-in when they detect the subterfuge?

I didn’t think the government should require to honor these tickets, but here I’m more concerned with the DOT’s efforts to ignore its own rules to see their desired result — and the unknown ways in which their decision will be applied in the future.

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 »

More articles by Gary Leff »

Pingbacks

Comments

  1. Great analysis and conclusion, Gary. Are we under the rule of law or rule of man? Regrettably the answer is being more and more obvious each day in AMERIKA.

  2. Not to mention that I actually AM Danish and paid with a Danish Credit Card and Danish billing address. United still voided the ticket and DOT doesn’t care… Live to fight another day I suppose, but definitely a little shady to cancel those tickets with 100% legitimate info as well!

  3. Well, if the rules are about to be modified, there need be little concern about the precedent this “exception” to the present rule creates.

    More importantly, what level of discretion should enforcement authorities have when enforcing their own rules? There are surely a thousand opinions here, but in this instance, DOT’s decision is far from arbitrary and capricious.

  4. The fact is these are rules, not laws.

    Unless it’s codified as a law it will always be uncertain.

    Better to get the decision out there first than go through the time and process for a formal rule change.

    Better question – when was the last time a consumer was truly protected by this rule? And I don’t mean mistake fares booked by gamers.

  5. How about the headline:

    “The DOT Guts its Post-Purchase Price Increase Prohibition to Punish Scammers”?

    Because it was clear that the folks involved were acting in bad faith. The fact is that the “customers” were misrepresenting their addresses in a foreign country to take advantage of a mistake that US residents were not eligible to participate in.

    I am no fan of United, and fly them only when I absolutely have to.

    But United could have easily terminated the accounts of anyone who tried to cash in on this.

  6. I believe in consumers’ rights, but I think the “bad faith” phrase applies here. People buying something Danish Kroner, lying about their home address, and buying dozens of itineraries hoping that the DoT would back them up? Hard not to side with UA here

  7. Spot on Gary.

    I disagree with the basis of DOT’s finding, because it departs (ba dum) from their own rule as noted in the Norwegian Wideroe decision. United’s lawyers couldn’t have suggested a better interpretation of the statute.

    Their determination that passengers were “acting in bad faith” is equivalent to adjudicating guilt (not sentencing of course). Hard to see how that is a determination that is made outside of a courtroom and not ignored when factored into their plain reading of their own rule (and concurring expository material) as it currently stands in the federal register.

    United could certainly bring legal action as the one harmed by the error, both against the currency exchange company and against those who may have “acted in bad faith” to demonstrate that in fact they did act in bad faith or performed a criminal or civil violation. The DOT, however, is not a court of law to determine whether people acted in bad faith and then make a decision based on that determination.

    I certainly can’t take this further myself, but I am disappointed in the way they’ve tried to reach this decision, even if the ultimate outcome would have been the same.

  8. Then why does Delta, for example, price trips in Euros when I have it originate in Europe even though I’m clearly searching from the U.S. ? Though I’m not manipulating the search, they are marketing a Euro rate to and American. So since they are doing this by default, it’s ok. But if I change it manually, it’s not.
    I’m fine with United not honoring the tickets, but there is the old double standard coming into play here..

  9. So I assume any mistake fare or deal that is posted on publicly available blog or forum is automatically categorized as a glitch that is abused and allows the airline to get out of it. This just drives things underground.

  10. It appears that DOT stopped short of interpreting its rule. Rather, it seems they elected not to take action, whether or not a violation occurred. I quote the Determination:

    “After a careful review of the matter, including the thousands of submissions from consumers and
    information from United, the Enforcement Office has decided that it will not take action against
    United for not honoring the tickets.”

    Thereafter, they identify why they are not taking action, but they rather much stop short of saying no violation occurred.

  11. In order to get the fare, the consumers protected under DOT rules (US Citizens/Residents) had to misrepresent themselves and claim that their billing address was in Denmark, when in fact it was not.

    While the DOT doesn’t have the power to require United to honor the fares for Danish citizens, I say the DOT should settle with UA where people with legitimate Denmark addresses can keep their tickets, but those who misrepresented themselves as being from Denmark get criminally charged with fraud. Win-win for everyone, right? 😉

  12. Nick:

    Similar to what would happen if a bank mistakenly left an ATM unlocked and people actually took money from the vault. These folks had to take the affirmative action to say they were residents of Denmark to take advantage of the mistake. That is willful and much different than if they tried to book a ticket and the price was found to be a mistake later.

    Years ago, I went to an ATM for $50; instead of two $20 bills and one $10 bill, I got two $10 bills and one $20. I complained to the branch manager, and was given the extra $10. Before they handed over the cash, they told me if I was lying, I would be subject to bank robbery charges. Turns out some employee swithched cassettes.

  13. The view that “contending that ANY inaccurate consumer information entered during the purchase process allows an airline to void a sale is troubling” is incorrect and a hyperventilation. “Inaccurate” information is NOT the same thing as “fraudulent” information, and the distinction is not at all difficult to establish. An inaccurate information becomes fraudulent when there is such a large number of the former that it defies common sense…as in UA/Krone case. Simply put: because intentionally entering inaccurate formation is fraudulent, the DOT’s resolution of this case is perfectly logical. The US government cannot be in the business of rewarding fraudsters!

  14. @Gary: I am still searching for the issues here. The purpose of this United States administrative regulation (NOT a law) is to prevent airlines from false advertising. For example, if my grocery store puts up a sign in the meat counter that says “prime rib $0.10 a pound” they need to honor it until they pull down the sign. Because this is a US agency their juridiction is the US – US citizens and companies doing business in the US.
    So explain why the DOT is wrong here? I understand everyone is angry they can’t perpetrate fraud against United. But “the DOT didn’t follow the rule” doesn’t address the DOT’s argument: the legislative intent was to prevent false advertising from defrauding US citizens, and in this case it seems CRYSTAL clear that’s not what happened. Your argument taken to the end is that the rules now apply only to US flag carriers, and I don’t buy it. Air France selling tickets in the US is no different than Wideroe selling tickets in the US. If the web site could be reasonably be expected to sell tickets in the US WITHOUT FRAUD then the rules should apply.
    But since that is NOT what happened here: US citizens had to engage in FRAUD by LYING about where they live to trigger this incorrect price. Therefore the rules don’t apply, because a normal US citizen going to the web site and not engaging in fraud would not have been sold that ticket.
    So yes, this effectively means the end to “secret mistake fares that require the user to engage in fraud.” But I see no reason “missing fuel surcharge on Wideroe that shows up to every single person booking from the US-available web site regardless of whether they lie or not” falls into this “giant gutted exception.”

  15. I certainly share your concerns about the rule’s interpretation and application. @jakobv84 SHOULD be protected by the rules, in my view, and the DoT should have taken a more nuanced view of the situation and worked closely with UA to identify the particular fraudsters rather than applying a blanket solution to the situation.

    On the other hand, @jfhscott points out that the DoT merely decided not to enforce the rule, which is notably different from interpreting it. I’m still concerned about the logic they used in saying that it “wasn’t marketed to US consumers.” They should have stuck by the “we don’t enforce rules to support fraudulent activity” line instead, and again, in support of that idea, they should have forced and worked with UA to sift through each transaction and identify those who did NOT commit fraud to book their tickets.

    Why? Because no matter the entity at fault in this situation, the ticket that @jakobv84 purchased just increased in price.

  16. Federal regulators generally have enforcement discretion in dealing with matters like this.

    While United may have been in technical violation of the words of the regulation, it was apparently clear to the DOT that this was not an attempt by United to mislead consumers (intentionally OR unintentionally) because it’s not like this fare just appeared in the course of a normal search…rather consumers had to work (hard, in some cases) to make this fare appear. So the DOT simply declined to pursue enforcement to this case.

    Feds do this every single day; attempt to apply intent to regs rather than sticking to the strict letter of the reg.

    *IF* this had been a case where one could just pull up and book this fare without changing country of origin, etc. then it seems clear DOT would have enforced….until DOT regs are changed to be less consumer and more airline friendly….

  17. Gary,
    Some of us like the current rules. My understanding is that whenever there is rulemaking, it has to be open for public comment. Do you know about whether any public comment period for this is coming up?

    If thousands of frequent fliers flood the DOT with feedback supporting the rule as it is and it being interpreted in a way to benefit the consumers of these fares, do you think that the DOT would need to start acting in this way?

  18. @Daniel,

    I seriously doubt that when DOT promulgates the revised regulations they will protect “opportunists” who exploit mistake fares.

    The regulations exist to protect ordinary consumers from airlines which might increase cost not by increasing fares, but by increasing costs of ancillary services (bag fees and cancellation/change fees are a fiune example) after purchase. This explains why the date of purchase impacts what such fees might be.

    Even in this administration, I would not anticipate that a chorus of mileage running opportunists who want to enjoy sincere mistakes would impact the amended rules.

    Indeed, DOT’s action here indicates just that – they passed on the question of whether there was a violation. Rather, they essentially declared that question to be moot, as they are just not going to seek any enforcement at all. I posit that this reflects their general attitude which will guide tehe in the new rulemaking.

  19. What is the current status of the DOT rulemaking. Many of us knew that the current rule was over-reaching and unfair to the airlines. Air travel consumers should not have far greater rights buying an airline ticket than they have buying a product on Amazon or a hotel room from Marriott. But there should be some protections. Like prompt notification of error — perhaps tied to your travel date. Something like no leeway if you’re traveling that day; 2 hours if you’re travelling the next day; 1 day if you’re travelling the next week; and 3 days for all other itineraries. That would be fair to everyone.

  20. If by “gut” you mean they’ll no longer allow people to take advantage of fares that are clearly a mistake and which they need to manipulate things beyond how a normal transaction unfolds, then yeah – they gutted it.

    But if the rule still exists that someone who purchases a ticket in good faith and a price reasonably relied on cannot have the price changed, then no – the rule is exactly as it was before.

    Agressive trying to take advantage of mistakes like this and then, further pressing this issue with the DOT when the just outcome is clear, will lead to less consumer protection – not more.

  21. @Gary: I support your views expressed. I don’t take exception to the means achieved but I certainly take exception to the DOT reasoning to acheive it.

    Had DOT ruled they were not enforcing the rule on non-Danish residents on 11 Feb but allowing bona fide Danish
    residents (such as @jakobv84) to provide proof of residency and upholding their complaints, my objection will be less.

    @jakobv84: will you consider re-presenting your complaint to have DOT address your Danish residency?

    @kokomutz, bode: If legislative/regulatory intent is to be argued then shouldn’t we all look in the FAQ to 399.88 – mistake fares are covered? Claiming a regulator/rulemaker has an intent that is not the one it has written down and published on its own website creates no end of regulatory uncertainty. I’m all for amending bad rules in a timely manner, provided the rules in place are enforced so there is no misunderstanding of what is compliant and what is not.

  22. Surely there’s a Human Rights Commission somewhere we can take this issue to?

    Joking aside, there are a couple of fact-like-statements that are getting passed around regarding the this fare:

    1. United never claimed that the issue was that people not resident in Denmark were not eligible to take advantage of the currency error, they claimed that NO ONE, including Danes, was entitled to the mistake fares. They couldn’t care less about where you were when you booked, just that you took advantage of the currency conversion error.

    2. To book tickets under this “sale” no one had to enter a false address (you could use your regular home credit card billing address) or falsely state they were a citizen or resident of Denmark. You –did– have to select from a drop-down that your LOCATION was in Denmark OR that you received credit card statements in Denmark. That first requirement, incidentally, is apparently in violation of EU law which requires that an item offered to someone in one EU jurisdiction must be offered to anyone in the EU under the same price and terms.

  23. Seems to be that DOT is saying, “We don’t want to be agency people come running to when they manipulate to get a bargain, then it is denied.” DOT thinks they have better things to do than protect the “rights” of people who knew full well exactly what they were doing. Actual Danish customers may have a case. The rest are just pushing and pushing DOT to change its rules with their greed and lack of moral compass.

  24. @Daniel the public comment period ended in September, the Notice of Proposed Rulemaking merely asked for suggestions on how to handle the issue it did not lay out DOT’s approach.

  25. The Danish (with genuine Danish address etc) whose mistake fares were cancelled…..why would they complain to the US DOT? Surely they would contact the European Civil Aviation Conference(ECAC)or other ? – This is a bit out of my sphere of knowledge…

  26. Clear fraudulent intent with need to lie about home country = purchasers lose.

    Also, I agree with ermintrude, why go to the US DOT for Danish residents’ rights? Go the local Danish or European regulator.

    The sense of petulant entitlement amongst some in our society is mind-boggling.

  27. Would you have any suggestions how to proceed with this as a European?
    Perhaps contact a European regulator directly as someone mentioned?

  28. I should have said actual Danish customers may have a valid complaint with United. I don’t know. Maybe they don’t. Though they almost certainly didn’t really believe that was a valid price, at least they didn’t have to engage in deceitful action to see it. I said at the time (facetiously, sort of) that those who feel the fare should have been honored should be expected to make their case personally with a report filed in Danish in Copenhagen, since that’s where they say they live.

Leave a Reply

Your email address will not be published. Required fields are marked *