How Can I Sell My Miles and Points Without Violating User Agreements?

TPG reader Michael has a ton of points and would like to sell them:

"I have over a million points (a mixture of United miles, American miles, Ultimate Rewards, Membership Rewards, British Airways Avios, Southwest points, StarPoints, US Airways miles, ANA and Delta SkyMiles). How can I sell the points without violating airlines' user agreements? If I can sell them, how much can I get? How does the IRS look at the sale of points?"

The short answer is – you can’t sell them. There are plenty of miles brokers on the internet, but it is against the terms and conditions of all frequent flyer programs to sell your miles, and airlines are very active in trying to hunt out people who are selling miles. There is little tolerance for any activity of this sort and the airlines do have technology to hunt for people who sell miles. They look for activity that might be unusual for your account.

These brokers will most likely have you transfer your points into a third account and pay you a fraction of what they are worth (usually about 1 cent apiece) and then basically these brokers are sell discounted business class tickets to unknowing parties most of the time using your miles, so people could easily at the airport say, "I paid for this ticket," and if the flight is cancelled or if something else goes wrong, there is a very good chance that it could still come back to haunt you. If you get caught you will lose all your points, no questions asked and no recourse.

I have never sold miles and I don’t recommend it. You could probably search the internet to find a broker since I am sure there are more reputable ones than others, but as I said, I wouldn’t advise doing it because when the airlines do find out you will lose all your miles and it is just not worth it in my opinion. I have discussed selling American Express Membership Rewards points in the past and brokers I contacted offered a 1-1.3 cents value on them, which is not a good deal - on top of the risk that you could lose them altogether.

While it is against the rules to sell miles, many programs do allow you to gift them to friends and family without making a profit. It is a decent way to keep your miles active, make sure they aren't wasted, and give back to someone you love. For example, US Airways recently held a 100% share miles bonus (which unfortunately expired on October 15). Through the promo, "Members may receive a maximum of​ ​50,000 bonus miles during the offer period," but you could send as many miles as you’d like to other accounts and each was eligible to earn up to 50,000 bonus miles. Sharing with this bonus meant you were creating miles for about 1.1 cents apiece, which is worth it to me since US Airways miles can be redeemed for valuable Star Alliance awards.

American Airlines also had a shared miles bonus that expired on October 10, where you would receive a 20% bonus when sharing 5,000-25,000 miles; a 25% bonus for sharing 26,000-40,000 miles or a 30% bonus if you share 41,000-50,000 miles. To share miles there was a fee of $20 per 1,000 shared miles for the first 5,000 miles, then $10 per 1,000 shared miles for anything on top of that plus a $35 transaction fee. Not nearly as good a deal, but still something to consider.

Earlier this month, JetBlue launched a Family Pooling, which allows up to 2 adults and 5 children to essentially share a single account.

In short, if you have miles all over the place and are looking to consolidate, rather than selling your miles, I'd look for ways to share or transfer them, get in on some lucrative credit card bonuses to hit redemption thresholds, or find another way to keep them or put them to use.