Delta Charges $1000 to Buy Miles, Then Refuses to Sell the Promised Award. Can She Sue?

Tiffany writes a really important post over at One Mile at a Time.

She describes finding Delta award seats on the airline’s website. She’s making the booking for four passengers, and the miles aren’t all in the account. So she calls the airline, has them set up the award, and then purchases about $1000 in miles in order to buy the award.

There weren’t enough miles in the SkyMiles account for all the passengers, so the plan was to call Delta and have an agent put the itinerary together before purchasing the remaining miles.

A great agent understood the concern, confirmed the space, built the itinerary, entered all the passenger info, and calculated the taxes — which exactly matched what delta.com displayed as well:

A textbook setup, really, so ~$1000 worth of miles were purchased, the credit card number was provided…

And then the price of the award jumped from 110,000 to 375,000 per person one way when the agent went to issue the tickets.

After escalating to web support, a supervisor, and the re-issue desk they couldn’t get the flights to ticket at the price that would be initially quoted each time. They finally tried “seven different itineraries across three days” before getting something to come up at the promised price for the Tokyo – New York itinerary.

Tiffany concludes,

In another industry this would be a blatant weights and measures violation, but I guess those regulations don’t apply to fake currencies

Although I’m not sure that’s right, because in this case she was induced to spend over $1000 purchasing miles based on Delta’s representation.

Here she specifically outlined her plan to spend $1000 on the basis of the airline’s representation, and did so while on the phone with the airline’s representative.

So it strikes me that there would be a reasonable claim for detrimental reliance — or would some sort of estoppel claim be an artifact of state contract law and thus pre-empted by the Airline Deregulation Act under Northwest v. Ginsburg (leaving the Department of Transportation as the only avenue of complaint, when of course the DOT doesn’t currently regulate frequent flyer programs)?.

I’d love to hear attorneys specializing in contracts on this. Delta made an offer, Tiffany spent money for the miles in order to complete the transaction on the basis of that offer, and Delta wouldn’t keep its end of the bargain. And mileage purchases are non-refundable. Is this actionable?

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. If you have problem and can’t sue the business it’s probably the Republicans to blame for this.

  2. It’s an interesting question Gary. While the claim does arise out of state contract law, you have to remember that the ADA doesn’t preempt all state law claims, just ones related to rates, routes and services. Whether or not Tiffany’s claim relates to rates is going to be the question, and there currently isn’t a whole lot of case law on the subject.

  3. Why is this even news? This is par for the course at DL and certainly should be no shock to the person who coined the term “Skypesos”

    I feel sorry for anyone who is forced to fly DL (as I was once) because the skypesos you receive are not even worth the kilobytes of storage space in your awardwallet account.

    Good luck on securing a refund for the purchases miles.

  4. @Bob well claims related to benefits of a frequent flyer account generally were held to be preempted in Ginsburg, which was a claim of an abrogation of a duty of good faith and fair dealing.

  5. @credit the Airline Deregulation Act, championed by Senator Ted Kennedy and signed into law during the Carter administration was held by a bipartisan coalition of Supreme Court justices to pre-empt contract claims deriving from state law. The idea is that a national transportation system shouldn’t be regulated by any one state. There’s the DOT to adjudicate complaints. However the DOT doesn’t regulate frequent flyer programs. Yet it was precisely a frequent flyer program at issue in Northwest v. Ginsburg.

  6. It would be nice to see this go through the court system. If it does, wouldn’t it be nice if the Justices took the opportunity to reverse prior court rulings giving the airlines unilateral power over “points” with the consumer having zero power. Maybe it’s time to rebalance things.

  7. If someone wanted to argue that miles have no ascertainable value, this case would support that position.

    I understand the concept of dynamic pricing, but this is phantom pricing, a form of bait and switch.

  8. Gary – I had the same thought process… A few thoughts (just a law student – so this is not actual advice). I don’t believe that there is any estoppel claim here for the award ticket – but maybe a claim for recession of the mileage purchase.

    First – Delta’s advertisement of award prices on their website is nothing more than an invitation to bargain. I would argue that Delta accepts or rejects the award offer and the FF makes the offer (by clicking “buy”). This is consistent with the manner that other online and in-store cases have gone.

    Second – The FF purchased the mileage in reliance on the invitation to bargain. I think an estoppel argument might work for a recession of the mileage purchase. Damages would likely by a refund. (1) The miles were purchased in reliance of the invitation to bargain. (2) Delta abolished their award chart – telling people to find the price online – therefore increasing the estoppel claim. At most I think that the FF could claim fraudulent inducement for the mileage purchase and ask for the contract to be rescinded.

  9. @Gary

    Surprisingly, there’s a bit of a circuit split as to what “related to” even means. I think you’re right in that it’s probably going to be preempted, because this is related to a rate. The fact that it’s stemming from an FFP probably won’t even enter into the analysis. Without knowing what circuit Tiffany lives in though, she’s most likely out of luck.

  10. It’s an interesting question. I hadn’t considered the potential legal questions, but was prepared to start chargeback proceedings with Amex.

    What I actually find most bothersome is that no one at Delta is empowered to use logic to override the computer in these cases.

  11. This would give people the real reason Delta had decided to stop publishing an award chart: There’s now no reasonable expectation of a certain value except at time of purchase, which for this passenger would be at redemption, not at time of “quote.” That’s why car dealers all say “subject to prior sale.”

  12. If state law claims are preempted, and DOT doesn’t regulate frequent flyer programs, doesn’t that just mean that the case can proceed in federal court, and not through whatever administrative proceeding would otherwise be available with DOT?

  13. I take that back; you’d need some federal cause of action, since the claims you’d otherwise bring would be rooted in state law. Anyone have any ideas?

  14. @Bob I wouldn’t even worry about SMJ as a federal question. Personally, I’d write directly to the President and lead in-house lead counsel for the contract recession. Worst case – file in small claims court, somewhere where Delta does business (i.e., Arlington, VA as they operate at DCA) and plead the case well – put the burden on Delta. The fees are usually low enough to where it doesn’t really matter. If it gets thrown out then get creative with the “federal question” and file in federal court (filing fees make it not worth it)… I’m sure that there is a way.

    At the end of the day – there has to be a court of competent jx to hear this claim. You can’t just say “Byyyeee” because it is a FF program.

  15. @Dave you would pursue the claim in state court but without raising state-law specific claims, i.e. you would claim only straight-up breach of contract

  16. @Delta pulling a bait and switch? Better call Saul!

    I think there’s probably a statute of frauds problem here as far as the contract goes. She might have better luck with a tort case for detrimental reliance on Delta’s fraud – a sham offer that it could not or would not fulfill.

  17. She has a colorable contract claim, so, she should just sue in small claims because this will escalate to Delta legal. They will likely agree to refund her the $1000 plus court costs to dispense with it, but if not, she should just show up to court because it is very unlikely that they will appear for this small amount so its therefore very likely she’ll get a default judgment. More likely Delta legal settles pre-hearing, though, in my opinion and experience with similar matters.

  18. People need to stop flying DL.
    And stop collecting Skypesos.
    That’s the only way the airline will realize they made a big mistake and will come up with new enticing award schemes.
    Until then, the more you fly DL and the more you use Skypesos, the worse it will get.

  19. I for one love Delta!
    Enjoy overpaying for my tickets and getting screwed when I go to redeem Sky Pesos
    Glad they took away award charts as why should the public know what they are getting?
    The suspense of not knowing how bad I am about to get screwed excites me
    When people call me a clueless moron for flying Delta I always say but they are always on time and I can get drunk in their club for free
    And they have relics they call planes still flying

  20. I have gone on record (in numerous places) stating that this entire situation is horrible (and really bad form for Delta). Especially that a supervisor can not over-ride the situation since the award reservation was on hold and just needs to be ticketed.

    BUT, and this is a BIG BUT… Not sure if anyone has pointed out that DELTA NO LONGER ALLOWS ONE TO PUT A HOLD ON AWARD RESERVATIONS. Now, sure, Delta Diamond and SkyBonus members (like myself) have loop-holes or ways to convince Delta to put an award reservation on hold (for ticketing later).

    By the book, you are supposed to have the SkyMiles in your account and when you “click-through” to process the award you would be using miles you already had. In that case, you would do the final “click-through” the award would increase (and your would curse), but you would not be damaged. Or, shall we say damaged any more than the normal Delta annoyance of NOT getting an award at LOW or MEDIUM redemption.

    What you are not allowed to do (or supposed to do) anymore is have an award on hold and THEN transfer miles (AMEX, purchase SkyMiles etc.) and THEN issue the ticket.

    So, if you CAN’T (by the book) put a Delta award on HOLD. Then, how can one argue that the award (they put on HOLD but are NOT ALLOWED to put on HOLD) won’t ticket once they spent $1000 to transfer or buy miles.

    I agree, this situation is awful. But, perhaps, this is one reason why Delta does not allow award holds for reservations.

    Just my 2€cents.

  21. Ordinary contract claims weren’t affected by the Ginsberg case. The three elements of a contract are offer, acceptance and compensation. One can make a case that displaying the award space, let alone making the booking, is an offer. There is acceptance merely because she asked to make the booking. At that point is there a contract or an agreement to enter into a contract (if there is no contract until the booking is ticketed)? I’m not sure it matters as far as the ability to sue in small claims court.

    One could allege fraudulent inducement and breach of contract along with unjust enrichments (the miles are worth a lot more if award space is available for when and where you want to go).

    My suggestion would be to make a demand up on Delta for the amount it will cost to purchase the equivalent flights, less the fair market value of the miles (probably about a penny a mile). If Delta doesn’t agree to proceed with the booking as it was proffered the sue them in small claims court.

  22. @baccarat_guy “perhaps, this is one reason why Delta does not allow award holds for reservations” wait — the one reason is so that they can bait and switch customers?

    The agent set up the award and quoted a price, and relying on Delta’s agent they bought miles. Once the nonrefundable purchase of miles was completed, the agent said the price they quoted was not actually valid.

    I call that bait and switch, and one that harms a consumer because they’re out real miles.

    You think Delta is ok doing this?

  23. @gary I DO NOT think Delta is OK doing this. But, if one is going to claim damages (for purchasing miles) one might have to deal with the issue that Delta DOES NOT allow award reservation holds. (well, technically, they do for SkyBonus awards, but I don’t even want to go there).

    Delta stopped award holds more than a year ago. You truly have to “work around” to get an award to be on a hold. (European credit cards will often force it, since the reservations won’t ticket; and they will get pushed to a queue that once again won’t ticket them… then they get held in limbo.. but I digress).

    I was only talking directly to the “concept” of putting an award on hold (using SkyMiles) for the purpose of transferring or purchasing miles. I do believe, Delta could argue they are not responsible for that.

    Though, I also know one could argue if the agent did it, then award holds allowed.

  24. I suspect that the claim would be pre-empted, based upon holdings in Ginsburg and Morales. Rates, routes, and services have unfortunately been way too broadly construed by most courts.

    I suspect that the recission claim could have some legs, but even that has a potential Ginsburg/Morales problem because there is at least a colorable argument that this falls broadly under the issue of fares.

    If I’m reading your post correctly, it looks like – after 7 tries – DL was able to get her from NY to Tokyo at the promised fare. If that’s the case, she’s out about an hour of her time and a few gray hairs. If I’m reading it wrong and DL didn’t accommodate her from the same point A to point B at the same price, then she should contest the credit card charge.

    I also find that sending letters to General Counsels of most companies, in general, is an effective process when dealing with an issue which touches legal concerns. We lawyers are by nature conservative and risk-adverse, so we push for solutions rather than risking litigation when possible. But given the sheer arrogance of DL management, any efforts in getting help from the ivory tower might be as worthless as a fart in a windstorm.

  25. Ha! I just priced Delta tickets from NY to Chicago, they came up at $185 or so. I checked the “miles plus cash” price for the heck of it, and the same flights were priced at 10K miles plus $190. Go Delta!

  26. This is not the first time Delta’s website has given false info or someone has been induced to make a purchase based on false information on its website. If there was a viable cause of action for these matters, surely someone would have found it long ago.

  27. For detrimental reliance or equitable estoppel, I think the issue is whether Delta can be shown to have made any guarantee that the award would be book able at a given “price” at any point in the future. An honest, but mistaken perception of such a guarantee being offered is unlikely to cut it. In reality, Delta should just cut a refund for 1k and do the right thing.

  28. I have a similar situation with American. I put a reservation on hold, I was 3k short, I paid $125.00 dollars. Although I have the American Aviators card and I would get the %10 of the miles back but I had to have the 40k per ticket, for 2 pax in my account. This is an award from Indian subcontinent to Europe, First Class for 40k before the mileage hike on March 22nd. It was sent to ticketing on March 21st because of some extra legs in and out of Madrid that was not approved. The final itinerary was ticketed as MLE-DOH-AUH-LHR-MAD-GRX at 40k each and taxes paid and taken out of my Chase visa. I had another complex itinerary on the same route with 8 segments that was ticketed but cancelled by American after ticketing and miles deposited back, yet to see the refund on taxes on that. I was sent another email by American that this itinerary is not correct and I need to have two separate awards although they are not clear and they have said that they are going to cancel this ticket? Can they legally cancel a ticket after being ticketed? They have taken the miles out and I have paid for taxes? There is no way that I can get a First Class on Eithad for two people on this route for 40k miles? They had initially said that they would honor this reservation and now it is ticketed and they are saying that I have to cancel it and start all over and pay 62,500 miles for each ticket. This is not fair as I booked these tickets with much difficulty and calling their Sydney and London office before the devaluation and I was on hold for hours and hours. Any advise? How can I hold on to my ticket? Does American have a legal right to cancel my tickets?
    Any advise would be appreciated! Who should I call? What should I say? When I called Qatar, Etihad and Iberia I was told that yes, there are two ticket numbers. However when I go to AA.com I do not see my itinerary and it says to contact AA.
    What should I do? This is for my 50th birthday so please help. I was looking for these First Class seats literally for an entire year and thanks to Gary’s advise, I called Syd office and finally was able to find 2 seats.
    Please email me any legal advise. Thanks, AlanLouganis@yahoo.com

  29. @Tiffany, you should file a complaint with the DOT. Ginsburg squarely told them that it’s their domain, and the fact that they’ve not acted on frequent flyer program in the past is because they were considered by them as a form of rebate.

    You paid $$ to acquire miles, so your case sits squarely as one of purchase of transportation. It was not a rebate for having.flown in the past. So the DOT here has the duty to act (as reminded by the Supreme Court) that it can’t ignore.

    Please do file such a complaint. We will all be better for it!

  30. I realize that none of the major U.S. airlines are particularly good, but this incident (plus the fact that Delta no longer publishes their award chart online) cements my intent never to fly DAL unless their airfare is significantly better than any/all competing carriers. If Delta’s air fare is the same as (or in the ballpark of) another carrier, I’ll choose the other carrier(s).

  31. +1 Gary on “straight-up breach of contract” & Andyandy et al on fraud/ detrimental reliance! Both of which avoid the “regulation” issue.
    I live in Charleston SC (CHS) where DL has the advantage of real “non-Barbie” jets (often MD-88s/90s) to/ from ATL & onward to cities to which I travel.
    Whose miles should I earn when flying DL? Alaska? KLM? Czech?

  32. I don’t see a claim here. The issue is one of offer and acceptance. With respect to the award pricing, Delta made an offer (via the website/telephone quote), but had the right to change that offer at any time up to acceptance. Acceptance would only occur when Tiffany clicked through to book the award, but as she concedes, the price changed at the “final confirmation screen” — i.e. before she could click to book. Delta therefore changed the offer at that time and Tiffany was still free to accept or reject the revised offer.

    The sale of miles is a separate transaction and Delta fulfilled its contractual obligations to Tiffany — they quoted a price for the miles, she accepted their quote, and Delta provided the miles.

    There is no estoppel claim for either transaction because there was no reasonable detrimental reliance. There cannot be reasonable detrimental reliance on the quote for the award cost because Delta was still legally free to change the price quote at any time prior to acceptance. There similarly cannot be reasonable detrimental reliance on the miles purchase because any reliance was on an offer that Delta was still free to change. There is no suggestion that Delta ever said “even though the final confirmation says 350K miles per ticket, we will sell the tickets for the previously quoted price of 110K miles” — that’s the typical situation for estoppel.

    This may seem harsh, and the better business practice would likely to be refund the miles purchase, but the actual law is clearly on Delta’s side. It is no different than if — for example — a customer started an online award purchase at 11:59pm on the day before a devaluation, but the airline then quoted the new, devalued price when the customer reached the final pre-purchase confirmation page at 12:01am. Because the offer changed prior to acceptance, the airline certainly would have the right to force the customer to pay the new price to complete the transaction.

  33. @Storm this was done by phone, though, the agent made the offer, Tiffany accepted, and it was the agent that then reneged upon hitting confirm on their own cash register.

  34. Gary — I read the OMAAT post differently, with no suggestion that the agent made an offer (but instead simply recited what the website showed). But even if that were the case, the issue would then turn on apparent authority, as the agent presumably did not have actual authority to offer a different price than the actual price that Delta intended to charge. The question of apparent authority would turn on the specific representations of the agent, as well as Tiffany’s knowledge regarding the agent’s authority. That is a much more complicated, and very fact intensive, question.

  35. @Storm the agent doesn’t offer a price from the website, but from its own systems, the agents have authority to offer the price Delta’s computers show them all day, every day. Delta told the price it intended to charge when the agent set up the award. The price populated, when the agent went to process the credit card the system then changed the price. Tiffany notwithstanding, looking at a median customer, there’s going to be the widespread belief that prices quoted by an a telephone agent employee of the airline are prices quoted by the airline.

  36. I don’t know who crafted the ADA in such a way as to leave the public without adequate remedies to address Tiffany’s problem, but I think the first commenter is correct, sort of. Deregulation is a Republican panacea. Dems happened to buy into it on this occasion.

  37. (Cookies). Ping a fare multiple times and it increases. Wait a few hours and it often returns lower amount. This has been often my experience.

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