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Airline frequent flyer programs subject of federal hearing on 'unfair or deceptive practices'

April 15, 2024
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4 min read
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Airline frequent flyer programs subject of federal hearing on 'unfair or deceptive practices'
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The U.S. Department of Transportation will hold a public hearing on airline frequent flyer programs, the agency said Monday, part of an investigation into potential unfair or deceptive practices.

The hearing, which is scheduled for May 9, will be jointly hosted with the Consumer Financial Protection Bureau and will include a focus on cobranded airline credit cards, the agency said. It will discuss various policies and impacts on travelers.

In late December, the DOT confirmed to TPG that it was meeting with airline representatives to discuss various aspects of loyalty programs and "gathering more information on this issue."

"We plan to carefully review complaints regarding loyalty programs and exercise our authority to investigate airlines for unfair and deceptive practices that hurt travelers as warranted," the DOT told TPG in a statement at the time.

On Monday, DOT and CFPB spokespeople said the agencies would use the coming hearing as part of its fact-finding effort.

"The joint hearing is an opportunity for DOT and CFPB to gather more information for determining if additional action is needed to ensure fair competition in these industries and a fair and transparent experience for passengers and cardholders," the agencies said in a statement.

Among the aspects of the programs being scrutinized are the transparency practices surrounding booking award tickets, the devaluation of miles over time, the transferability of points and miles, and the nature of notice given to customers when making changes to the program, according to reports in December.

The CFPB, meanwhile, is looking into "whether credit card issuers are following through on promises of rewards, points, and miles to draw in consumers and sell more credit cards," Monday's statement said.

The hearing will involve a panel discussion hosted by Transportation Secretary Pete Buttigieg and CFPB Director Rohit Chopra. Several airline and banking industry representatives will serve as panelists, including:

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  • Scott DeAngelo, executive vice president and chief marketing officer, Allegiant Air
  • Morgan Harper, director of policy and advocacy, American Economic Liberties Project
  • Andrew Grimm, president and CEO, Apple Federal Credit Union
  • Sara Nelson, international president, Association of Flight Attendants
  • Lukas Johnson, chief commercial officer, Breeze Airways
  • Erin Witte, director of consumer protection, Consumer Federation of America
  • Robert Patrick Cooper, senior vice president and general counsel, OneUnited Bank

Notably, no representatives from the largest U.S. airlines or their cobranded credit card issuer partners will be participating.

Get caught up: DOT looking at airline frequent flyer programs for unfair practices

Cobranded credit cards have become big business for airlines over the past decade, boosting valuations of their frequent flyer programs and driving billions of dollars in annual revenue for the carriers.

Delta Air Lines, for instance, has said that nearly 1% of the U.S. GDP is spent on its cobranded credit cards. The airline earned $1.7 billion from its cobranded credit card partnership with American Express in the first quarter of this year.

In 2020, during the peak of the COVID-19 pandemic, United Airlines used its MileagePlus loyalty program to secure a $5 billion loan, valuing the program at nearly $22 billion.

Related reading:

Featured image by K.C. ALFRED/GETTY IMAGES
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Why We Chose It

There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)

Pros

  • 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
  • 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
  • Packed with credits foodies will enjoy
  • Solid welcome bonus

Cons

  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber and other dining credits
  • You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
  • Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
  • Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
  • Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
  • $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
  • $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
  • $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
  • Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
  • No Foreign Transaction Fees.
  • Annual Fee is $325.
  • Terms Apply.