Sept. 5 (UPI) — Transportation Secretary Pete Buttigieg on Thursday announced the launch of wide ranging probe into the “fairness and transparency” of the four biggest U.S. airlines’ frequent flyer rewards programs.
At a time when such rewards programs have become a vital asset for the traveling public, new efforts are needed to ensure that American Airlines, Delta Air Lines, Southwest Airlines and United Airlines are providing the promised value for customers, Buttigieg said.
“Points systems like frequent flyer miles and credit card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings,” he said in a statement.
“These programs bring real value to consumers, with families often counting on airline rewards to fund a vacation or to pay for a trip to visit loved ones. But unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value.
“Our goal is to ensure consumers are getting the value that was promised to them, which means validating that these programs are transparent and fair,” he added.
Under the effort, the Department of Transportation is demanding company documents and information covering four categories: devaluation of earned rewards, hidden and dynamic pricing, extra fees and reduction in competition and choice.
For instance, the DOT is asking the four airlines to provide documentation on if they reduce the actual dollar value of the points by “moving the goal posts,” such as by increasing the number of points needed for redemption, changing an expiration date or adding new hurdles to qualify for status upgrades.
Similarly, Buttigieg is demanding airlines provide the average dollar value of one reward point, the value of a point when it is redeemed for various services, and the price to purchase a point directly from the airline.
The DOT also seeks to shed light on the “opaque” dynamic pricing of frequent flyer points, under which the number of points needed for redemption change “frequently and unpredictably.”
Extra fees are targeted as well, with the DOT demanding the four airlines “identify and describe … each fee associated with their rewards program that is charged to consumers” and to provide “the rationale for charging the fee.”
The airlines issued responses on Thursday indicating they are willing cooperate with the probe.
“Our Members’ loyalty means everything to us, and providing a meaningful rewards experience is the top priority within Delta’s SkyMiles Program,” Delta Air Lines said in a statement issued to media outlets. “We received the DOT’s inquiry and will respond accordingly.”
The new probe comes as President Joe Biden and the Democratic Party’s 2024 presidential nominee, Vice President Kamala Harris, are focusing on consumer protection as a key campaign theme.
Last month, the White House announced proposed rule changes across several departments to streamline customer service experiences and prevent companies from saddling consumers with cumbersome waits and processes to cancel services or get refunds.
As part of that initiative, the DOT presented a rule that would require airlines to give automatic cash refunds to customers instead of leaving the burden to customers to navigate a series of steps to receive the funds back.