Uh oh: United updates its policy on mistake fares, gaming the system

Mistake fares generate a lot of buzz, but good luck getting them honored on United Airlines.

The Chicago-based carrier updated its contract of carriage document on Friday, Feb. 17, with some significant changes for those who purchase mistake fares.

Effective immediately, United "reserves the right" to cancel mistake fares, which the carrier now defines as "tickets priced at a zero or close to zero fare."

The airline also added a provision that it would reimburse any "reasonable, actual, and verifiable out-of-pocket expenses incurred by the purchaser in reliance upon the ticket purchase."

That means that if you purchase a nonrefundable hotel, car or tour package in conjunction with a mistake fare, the airline will make you whole by covering that cost when it decides to cancel and refund the ticket.

In addition to the updates regarding mistake fares, the carrier also added some additional language around what it considers an "improper reservation." In particular, consider yourself warned if you buy United flights that "are or likely will be delayed" and then "make a claim or receive a benefit" from United.

In those cases, your ticket is subject to cancellation, and United may also close your MileagePlus account, take away your miles, void any future flight credits, ban you from flying with the airline and assess you for any amounts owed in conjunction with these fraudulent practices.

While United didn't define what it means by booking a delayed flight and then making a claim or receiving a benefit from the airline, I'd imagine that this update is potentially targeted at travelers who purposely book last-minute delayed flights to collect compensation.

United often gives future travel vouchers or miles to travelers who experience lengthy delays, and compensation is a legal requirement for flights to and from Europe under the EU 261 regulation.

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Email address

Sign up

By signing up, you will receive newsletters and promotional content and agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.

When a long-haul flight to or from the European Union is delayed by at least four hours or canceled due to an issue within the airline's control, you're entitled to 600 euros (about $640) in compensation. A similar rule applies to flights to and from the United Kingdom, as well as a few other countries, including Israel.

United seemingly doesn't want passengers gaming the system by booking delayed flights to collect compensation. In fact, a last-minute walk-up fare for a delayed flight between the U.S. and Europe could cost less than the amount of compensation that you'd receive under the EU 261 regulation.

While United didn't share with TPG the reasoning behind these contract of carriage updates, it's theoretically possible that some travelers have taken advantage of these rules and requested thousands of dollars in compensation. Now, the carrier is putting an end to that practice with these new provisions that could lead to a lifetime ban (and other punishments) from the airline.

Meanwhile, codifying a mistake fare policy into the contract of carriage doesn't actually change much from a passenger perspective.

That's because U.S. airlines must follow the Department of Transportation policies, which actually include a similar provision around mistake fares.

In the early 2010s, the DOT required airlines to honor these tickets as part of its prohibition on post-purchase airfare increases. However, honoring mistake fares seemingly wasn't the intention of the rule.

In 2015, the agency revised its policy to allow carriers to cancel and refund mistake fares after demonstrating that they are indeed mistaken. As part of the updated policy, the DOT also requires airlines to reimburse out-of-pocket expenses incurred upon reliance on the ticket purchased.

As you can see, United's update around mistake fares mirrors the DOT's, though this is the first time that the airline has codified the rule into its contract of carriage.

By purchasing a ticket with United, you must agree to abide by the airline's contract of carriage. Without checking the box that you agree, you won't be able to move forward in the purchase process.

So, whether or not you like the new rules, you must abide by them to fly with United. If not, consider yourself warned — you might lose the ability to fly with United, participate in the MileagePlus loyalty program, or worse ...

Related reading:

• 6 things you need to know about United Airlines MileagePlus
• The best credit cards for United Airlines flyers
• What is United Airlines elite status worth?
• Maximize your airfare: The best credit cards for booking flights
• The best credit cards to reach elite status
• How to survive basic economy on United Airlines