The DOT Audits Frequent Flyer Programs

The DOT audits frequent flyer programs as Representative Alan Grayson contends the programs are “greedy and deceptive.”

The Department of Transportation (DOT) has begun examining airline frequent flyer program practices after Representative Alan Grayson, an Orlando-based Florida Democrat and frequent flyer, requested the audit in July 2014. Grayson contends that the lack of competition among frequent flyer programs has resulted in the programs becoming “greedy and deceptive” in the way they administer the programs.

“We’ve crossed the line from a series of programs throughout the industry that are honest and constrained by competition to programs that are no longer constrained by competition,” Grayson says.

Grayson has a unique understanding for the woes of the road warrior as he has accumulated nearly 10 million miles in FFPs and like many others, has become disillusioned with on-going devaluations and last-minute program changes. While the DOT does not have regulations related to the terms of airline frequent flyer programs, it does require that the programs disclose program rules to members. The DOT also provides guidance to airlines for disclosing costs they may assess related to frequent flyer award travel. Furthermore, the failure to adhere to the DOT’s guidance could, “constitute an unfair and deceptive practice in which enforcement actions can be pursued against the airlines,” stated a DOT memorandum.

In his request, Representative Grayson complained of the lack of transparency and advance notice when frequent flyer programs change their program terms and conditions and says that ideally, the airlines should be forced to give at least one year’s notice of major program changes and to offer at least one award seat on every flight.

A DOT memorandum states, “Accordingly, our audit objective will be to assess DOT oversight of airlines’ compliance with frequent flyer program disclosure requirements.”

[box type=”shadow”]INSIDE Point: Grayson tweeted, “Thanks to us, the DOT Inspector General is investigating unfair and deceptive frequent flyer programs.” We should soon know if any changes are instituted by the programs after the DOT review. One frequent flyer quoted in BloombergBusinessweek says, “This is an area where the DOT sniffing around could just have an immediate benefit, even if they don’t start to write rules.” It remains to be seen if the DOT looking into frequent flyer programs will benefit the members of the programs.[/box]

DOT audits frequent flyer programs
Congressman Alan Grayson