Miles can vanish into thin air


It took a decade for Michael Sommer to earn more than two million frequent-flier miles on United Airlines. It took a single dispute over a ticket refund for him to lose his elite status, dozens of flight coupons and every last mile he had collected.

How did Mr. Sommer, a technology consultant from Jacksonville, Fla., get all of his points confiscated? Like an increasing number of frequent fliers, a majority of them business travelers, his mileage account was subjected to a secret audit by his airline. He says he learned of the review only when he checked in for a recent flight to Buenos Aires.

”I was ambushed,” he said. ”I was about to board the flight when a United Airlines supervisor at the gate said, ‘We have something for you.’ He handed me a letter that said I had been stripped of my status and miles as the result of an audit.”

Mr. Sommer called a friend at United to find out what had happened. The employee retrieved his electronic flight record, which was even more damning than the letter. It claimed he had improperly used a denied-boarding certificate as partial payment for his ticket. It instructed United Airlines representatives to confiscate all of his flight upgrade coupons, discount vouchers and free tickets, and to collect an additional $977 for the flight to Chile, which included a $377 change fee and $600 for the use of ”bogus denied-boarding certificates.”

United acknowledged that it had removed Mr. Sommer from its rewards program, but declined to discuss the particulars of his audit, ”out of respect for his privacy,” according to an airline spokeswoman, Robin Urbanski.

She said, however, that the customer was punished after a string of program abuses dating back more than two years and the action was not a result of a single infraction.

Indeed, in a 2001 letter to Mr. Sommer, United accused him of collecting miles for flights he had not taken and trying to claim credit for a first-class seat booked in economy class. The carrier warned him to observe the rules. ”Should your abuse of the program rules continue,” the letter added, ”we will have no choice but to terminate your membership.” Mr. Sommer denies he broke any program rules.

Few audits lead to such stark outcomes as Mr. Sommer’s did. But they are becoming more common, according to experts. That is because more airlines are either on the verge of bankruptcy or are already flying under Chapter 11 protection and are trying to whittle away their liabilities. With close to 10 trillion unredeemed frequent-flier miles among the nation’s carriers, rewards programs have quietly become a target.

”To make their liability as small as possible, airlines are auditing more mileage accounts and enforcing their frequent-flier mileage program rules more strictly,” said Ted Wright, an Atlanta consultant and former brand manager for Delta.

He said frequent travelers are upset, in part because airlines used to routinely bend award-program rules, particularly when it came to their best customers, and in part because of the zeal with which recent audits have been conducted.

”There is a sense among passengers that they are entitled to their miles,” he added. ”There is a sense that airlines don’t have any business taking miles away.”

The airlines apparently disagree, as Paul Bingham, an economic consultant in Washington, discovered. A frequent flier on US Airways, he claimed 3,000 miles he thought he had earned in a contest. Unbeknownst to him, he had submitted more certificates than the rules allowed. Several months after filing the paperwork, he got a letter from the carrier notifying him of an audit. ”The airline didn’t inform me in advance of the audit, nor did they offer me an opportunity to appeal,” he said. ”They just did it and then sent me a letter saying they’d done it and what action they took as a result.”

A US Airways spokeswoman declined to discuss the specifics of Mr. Bingham’s case ”because we respect his privacy.” But she said a review of his account revealed that no audits had taken place since 2001. ”There have been a handful of times in the past where a promotional code has been improperly applied,” said Amy Kudwa, a spokeswoman for the carrier. ”But in those cases, it was largely a matter of crediting the customers, not deducting miles.”

How do audits work? Airlines are tight-lipped about the reviews. But according to people who have been involved in the process, they rely on software that monitors mileage accounts for suspicious patterns like claiming miles for a nonrevenue ticket or using the wrong frequent-flier number when requesting mileage credit.

Generally, a fishy account is red-flagged and then investigated by an auditor. Fliers are not notified until the audit is completed and an ”adjustment,” a euphemism for having miles deducted, is made.

At United Airlines, passengers who have been audited can provide ”additional or clarifying documents” if they disagree with the results of the review, said Ms. Urbanski, the airline spokeswoman. ”There are no further appeals.”

Sometimes, an airline does not even notify an audited customer.

Christina Zimmel, an information-technology analyst in Clawson, Mich., was preparing to redeem her frequent-flier miles on Northwest Airlines for a vacation to Hawaii when she noticed her account was suddenly 10,000 miles lighter.

”I called the airline and asked, ‘What’s this about?”’ she remembered. A Northwest representative explained that an ”accounting error” had been made and that she was not entitled to the miles, which had already been subtracted from her account.

Ms. Zimmel said she was not as upset about losing 10,000 miles as she was about the way Northwest handled her case. ”It would have been nice if they’d told me about the audit,” she said.

According to Northwest, Ms. Zimmel had two frequent-flier accounts. She had qualified for a first-time booking bonus when she made her initial reservation through each one. Later, when she tried to merge them, the airline deducted one of the bonuses, worth about 4,000 miles, from the combined account. Northwest’s records did not reflect whether she had been notified of the action.

Airlines appear to be well within their rights to strip travelers of their miles, according to loyalty program experts. The fine print on most programs stipulates that the miles belong to the carrier and can be removed for any reason.

But Hal Brierley, a co-founder of the award-program consulting firm e-Rewards in Dallas, said airlines were no longer afraid to turn up the heat on passengers staking a claim on miles that did not belong to them, even if it meant going after their best customers.

Travelers should not take it personally, he added. ”I think there is growing evidence that airlines are looking for creative, aggressive ways to reduce the number of miles as a way of lowering costs,” he said.

Travelers like Mr. Sommer say it is difficult not to take it personally.

For starters, he said, the results of United’s first investigation in 2001 exonerated him of any wrongdoing because the airline restored most of the miles it claimed he had not earned. After learning of the results of its latest audit, the former elite-level frequent flier grudgingly paid the difference for his flight to Buenos Aires.

Mr. Sommer’s lawyer, Barry Roberts, said United’s actions had troubling implications for all frequent fliers. ”United and other airlines are taking in hundreds of millions, and perhaps billions, of dollars in cash for these miles,” he said. ”How can they turn around and say, ‘These miles belong to us. If we don’t like you, we can confiscate them’? I think consumers have rights, and those rights have to be defined either by a court or a regulatory authority.”

A mileage specialist, Tim Winship, who edits the Web site Frequentflier.com, describes the sale of miles as a ”huge business” but said exact numbers were difficult to come by. ”It is definitely in the hundreds of millions of dollars,” he said. ”It’s a profit center for the airlines, so in the sense that they can sell their miles but at the same time keep their awards liability in check, it’s a good thing.”

Mr. Roberts said his client was considering suing United to recover his rewards. ”They can’t just arbitrarily take his miles away from him,” he added. ”I mean, if you violate a bank’s rules, do they take all the money you have on deposit away from you?”

It took a decade for Michael Sommer to earn more than two million frequent-flier miles on United Airlines. It took a single dispute over a ticket refund for him to lose his elite status, dozens of flight coupons and every last mile he had collected.

How did Mr. Sommer, a technology consultant from Jacksonville, Fla., get all of his points confiscated? Like an increasing number of frequent fliers, a majority of them business travelers, his mileage account was subjected to a secret audit by his airline. He says he learned of the review only when he checked in for a recent flight to Buenos Aires.

”I was ambushed,” he said. ”I was about to board the flight when a United Airlines supervisor at the gate said, ‘We have something for you.’ He handed me a letter that said I had been stripped of my status and miles as the result of an audit.”

Mr. Sommer called a friend at United to find out what had happened. The employee retrieved his electronic flight record, which was even more damning than the letter. It claimed he had improperly used a denied-boarding certificate as partial payment for his ticket. It instructed United Airlines representatives to confiscate all of his flight upgrade coupons, discount vouchers and free tickets, and to collect an additional $977 for the flight to Chile, which included a $377 change fee and $600 for the use of ”bogus denied-boarding certificates.”

United acknowledged that it had removed Mr. Sommer from its rewards program, but declined to discuss the particulars of his audit, ”out of respect for his privacy,” according to an airline spokeswoman, Robin Urbanski.

She said, however, that the customer was punished after a string of program abuses dating back more than two years and the action was not a result of a single infraction.

Indeed, in a 2001 letter to Mr. Sommer, United accused him of collecting miles for flights he had not taken and trying to claim credit for a first-class seat booked in economy class. The carrier warned him to observe the rules. ”Should your abuse of the program rules continue,” the letter added, ”we will have no choice but to terminate your membership.” Mr. Sommer denies he broke any program rules.

Few audits lead to such stark outcomes as Mr. Sommer’s did. But they are becoming more common, according to experts. That is because more airlines are either on the verge of bankruptcy or are already flying under Chapter 11 protection and are trying to whittle away their liabilities. With close to 10 trillion unredeemed frequent-flier miles among the nation’s carriers, rewards programs have quietly become a target.

”To make their liability as small as possible, airlines are auditing more mileage accounts and enforcing their frequent-flier mileage program rules more strictly,” said Ted Wright, an Atlanta consultant and former brand manager for Delta.

He said frequent travelers are upset, in part because airlines used to routinely bend award-program rules, particularly when it came to their best customers, and in part because of the zeal with which recent audits have been conducted.

”There is a sense among passengers that they are entitled to their miles,” he added. ”There is a sense that airlines don’t have any business taking miles away.”

The airlines apparently disagree, as Paul Bingham, an economic consultant in Washington, discovered. A frequent flier on US Airways, he claimed 3,000 miles he thought he had earned in a contest. Unbeknownst to him, he had submitted more certificates than the rules allowed. Several months after filing the paperwork, he got a letter from the carrier notifying him of an audit. ”The airline didn’t inform me in advance of the audit, nor did they offer me an opportunity to appeal,” he said. ”They just did it and then sent me a letter saying they’d done it and what action they took as a result.”

A US Airways spokeswoman declined to discuss the specifics of Mr. Bingham’s case ”because we respect his privacy.” But she said a review of his account revealed that no audits had taken place since 2001. ”There have been a handful of times in the past where a promotional code has been improperly applied,” said Amy Kudwa, a spokeswoman for the carrier. ”But in those cases, it was largely a matter of crediting the customers, not deducting miles.”

How do audits work? Airlines are tight-lipped about the reviews. But according to people who have been involved in the process, they rely on software that monitors mileage accounts for suspicious patterns like claiming miles for a nonrevenue ticket or using the wrong frequent-flier number when requesting mileage credit.

Generally, a fishy account is red-flagged and then investigated by an auditor. Fliers are not notified until the audit is completed and an ”adjustment,” a euphemism for having miles deducted, is made.

At United Airlines, passengers who have been audited can provide ”additional or clarifying documents” if they disagree with the results of the review, said Ms. Urbanski, the airline spokeswoman. ”There are no further appeals.”

Sometimes, an airline does not even notify an audited customer.

Christina Zimmel, an information-technology analyst in Clawson, Mich., was preparing to redeem her frequent-flier miles on Northwest Airlines for a vacation to Hawaii when she noticed her account was suddenly 10,000 miles lighter.

”I called the airline and asked, ‘What’s this about?”’ she remembered. A Northwest representative explained that an ”accounting error” had been made and that she was not entitled to the miles, which had already been subtracted from her account.

Ms. Zimmel said she was not as upset about losing 10,000 miles as she was about the way Northwest handled her case. ”It would have been nice if they’d told me about the audit,” she said.

According to Northwest, Ms. Zimmel had two frequent-flier accounts. She had qualified for a first-time booking bonus when she made her initial reservation through each one. Later, when she tried to merge them, the airline deducted one of the bonuses, worth about 4,000 miles, from the combined account. Northwest’s records did not reflect whether she had been notified of the action.

Airlines appear to be well within their rights to strip travelers of their miles, according to loyalty program experts. The fine print on most programs stipulates that the miles belong to the carrier and can be removed for any reason.

But Hal Brierley, a co-founder of the award-program consulting firm e-Rewards in Dallas, said airlines were no longer afraid to turn up the heat on passengers staking a claim on miles that did not belong to them, even if it meant going after their best customers.

Travelers should not take it personally, he added. ”I think there is growing evidence that airlines are looking for creative, aggressive ways to reduce the number of miles as a way of lowering costs,” he said.

Travelers like Mr. Sommer say it is difficult not to take it personally.

For starters, he said, the results of United’s first investigation in 2001 exonerated him of any wrongdoing because the airline restored most of the miles it claimed he had not earned. After learning of the results of its latest audit, the former elite-level frequent flier grudgingly paid the difference for his flight to Buenos Aires.

Mr. Sommer’s lawyer, Barry Roberts, said United’s actions had troubling implications for all frequent fliers. ”United and other airlines are taking in hundreds of millions, and perhaps billions, of dollars in cash for these miles,” he said. ”How can they turn around and say, ‘These miles belong to us. If we don’t like you, we can confiscate them’? I think consumers have rights, and those rights have to be defined either by a court or a regulatory authority.”

A mileage specialist, Tim Winship, who edits the Web site Frequentflier.com, describes the sale of miles as a ”huge business” but said exact numbers were difficult to come by. ”It is definitely in the hundreds of millions of dollars,” he said. ”It’s a profit center for the airlines, so in the sense that they can sell their miles but at the same time keep their awards liability in check, it’s a good thing.”

Mr. Roberts said his client was considering suing United to recover his rewards. ”They can’t just arbitrarily take his miles away from him,” he added. ”I mean, if you violate a bank’s rules, do they take all the money you have on deposit away from you?”

Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at . Got a question or comment? You can post it on the new forum.

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