Can this trip be saved? Help, American Airlines wants $20,000! By Christopher Elliott | October 18, 2010 FacebookTwitterGoogle+Pinterest Nancy Schmuhl thought she’d paid for her American Airlines tickets. But the airline had one last bill for her: A $20,000 invoice for “certain fraudulent bookings” she is alleged to have made. You should read the letter it sent to her. I’ll get to that in a minute. In the meantime, you’re probably wondering: What kind of fraudulent bookings? Schmuhl made several fictitious reservations which she later canceled. Regular readers of this site will remember a previous American Airlines case. And United Airlines famously confiscated a passenger’s miles for similar behavior. Schmuhl made a few of the reservations and her assistant made the rest, according to her husband, John. She’s a very frequent American Airlines customer, with more than 100 flight segments a year. In her peer group this is common behavior. She learned “creative booking” from a travel agent many years ago and has discussed it openly with AA employees. She has a couple really close AA-employee friends who have actually helped her make sure she gets the flights and seats she desires. American is on record as saying it’s stepped up efforts to fight what it says is fraud. Let’s go right to the letter it sent to Schmuhl. This is a demand letter for damages caused by your fraudulent bookings on American Airlines. While American Airlines is ready to pursue all remedies under the law, we are willing to resolve this matter with you informally at this time. American Airlines recently learned of certain fraudulent bookings you caused on our system, and suspended your AAdvantage account and privileges. Over the last several months, you caused a considerable number of seats in the first class cabin to be booked for flights on which you were traveling, only to later cause those seats to be canceled so that you could receive upgrades into first class. Your fraud scheme made it impossible for American Airlines to sell those seats, causing the airline significant monetary loss. Our investigation shows that from September 14, 2009, through January 19, 2010, you caused such fictitious bookings on at least 5 flights for 18 first class seats. You caused at least $32,300.00 in monetary damages to American Airlines. Attached you will find a statement of account for the amounts you owe to American Airlines. To the extent this fraud scheme is tied to other individuals and/or business entities, American Airlines reserves its right to pursue recovery against them. American Airlines does not tolerate such fraudulent conduct. We take incidents of abuse and fraud in the AAdvantage Program, such as this, with seriousness and care. We value our relationships with loyal AAdvantage members, which makes it all the more difficult to understand why you engaged in this fraudulent activity. For settlement purposes, American Airlines is willing to not pursue legal proceedings against you if you make restitution to American Airlines in the amount of $20,000.00 and refrain from fraudulent bookings going forward. Acceptable forms of payment are: wire transfer, cashier’s check, and money order, made payable to “American Airlines.” For wire transfers, please contact me to coordinate. This settlement offer expires by the close of business on Monday, June 15, 2010. American Airlines makes this offer, which reflects a significant discount from the amount of damages you caused, as a good faith attempt to resolve this matter with you. Please be advised that if we do not hear from you by the expiration date ofthis offer, in addition to pursuing legal remedy, your AAdvantage account may be terminated. I look forward to resolving this matter with you. Charles F. Theis Senior Revenue Protection Analyst American’s policy is outlined here. From the manual: We will monitor monthly booking activity at the travel agent level in order to identify fictitious bookings. Fictitious bookings are those with name field items that read test/traveller/tourist or a surname with fictitious initials, i.e. a/b/c/d/e. You should eliminate the practice of holding space under speculative passenger names. But American didn’t follow its own rule, according to Schmuhl. No one from American Airlines contacted Nancy, verbally or in writing, regarding her booking practices. Back in February, an airline employee told her her AAdvantage account had been suspended. Schmuhl tried to find out why and reached out to Theis, who didn’t answer her calls initially. Finally, he confirmed that her account was under review. His method? “Match her AAdvantage upgrade requests with dates when no-show reservations had been made from the same IP address that she shares with thousands of Time Warner Cable customers in numerous cities,” says John Schmuhl. This case raises several questions. First, is this behavior illegal? Strictly speaking, no. It may be unethical, but I’m not aware of any laws against making a fictitious reservation. So while American Airlines may consider this activity fraudulent, it is doubtful that a court would side with it. During the discovery process, it would become clear that American’s own employees helped travelers like Schmuhl make fictitious reservations. Also, American’s system continues to allow travelers to make these bogus reservations. That’s not just like leaving the candy store unlocked; it’s stationing helpful employees outside the shop, who tell you how to swipe the merchandise and make a clean getaway. What’s more, the letter Schmuhl received is a form. I have another one like it that demands more than $100,000 from another American customer. Are American’s threats to take her to court credible? Probably not. The worst it can do is confiscate Schmuhl’s miles and suspend her frequent flier account. If I were her, I’d take the hit and get United or Delta to status match. But should I mediate this? I’m on the line about this one. I typically don’t get involved in mileage and upgrade issues, although I think American is not handling this case well. What do you think? A poll of 800 readers taken this morning says I shouldn’t mediate this case. FacebookTwitterGoogle+Pinterest Christopher ElliottChristopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at firstname.lastname@example.org. Got a question or comment? You can post it on our help forum.More Posts - Website - Twitter - Facebook - LinkedIn - Google Plus Chris AA CoC states the ficticious booking activities she engaged in are prohibited. She clearly breached her purchase agreement with AA, and AA can prove damages in the form of unsold seats. Slam dunk case in favor of AA IMHO.