Frequent Flier Rewards Come Under Scrutiny

By Eva Norlyk Smith, Ph.D.

If you are enrolled in a frequent flier or have been accumulating miles on an airline rewards credit card, you may have already noticed that while it’s easy to collect big mileage bonuses, cashing them in is a whole other story. Firstly, finding an available seat when you go to book your free ticket may not be that easy. Even worse, the miles you thought you had may have long since expired.

According to New York Senator Charles Schumer, airlines are cheating frequent fliers and rewards credit card users out of billions of dollars of unused miles every year, and he wants to put a stop to it. On Monday, Schumer called for new rules to protect consumers from losing their frequent flier and rewards credit card miles, because airlines fail to honor the miles.

At the heart of the matter is the fact that many consumers try to cash in their miles only to find that they have expired without them receiving any notice of the pending expiration. According to current regulations, airlines and credit card companies have almost unlimited powers to close accounts and cancel unused miles; they don’t have to give notice or a reason.

Schumer proposes to put regulations in place to require airlines to keep their travel reward promises. “These are not just free gifts, people earn them,” said Schumer in a statement to WIVB News. “They either earn them through their credit cards or by paying a lot of money to the airlines to fly around. So the idea that these are free benefits that can be taken back at will is just false.”

Frequent flier programs have been around for almost thirty years, and initially the miles never expired. Starting in the mid-1990s, however, airlines put a three-year limit on miles; some now even let miles expire if the account has been inactive for 18 months to two years. The rules differ from airline to airline, greatly adding to the confusion.

To create greater consumer protections, Senator Schumer urged the Department of Transportation to look into creating more regulations of frequent flier programs and investigate the business practices of airlines around frequent flier miles. According to Schumer, tens of millions of miles from frequent flier programs or credit card rewards have already expired without consumers’ knowledge.

Airlines currently have an estimated 10 trillion frequent flier miles on their books, worth an estimated $165 billion in free flights. According to reports, as much as 20% or more these may never be redeemed, either because they expire or because the customer never takes step to cash them in. Schumer also asked the agency to draw up new rules to improve disclosure and set limits on when miles can be rescinded and accounts can be closed.

How do you make sure your airline rewards miles don’t expire? If you have airline miles credit cards, call your card issuer and ask them about the expiration policies for the miles accumulated on your credit card. If you have a frequent flier program with one or several airlines, check your account statement for details about the expiration dates, or call the carrier and ask them about the current terms and conditions of your frequent flier program.

Once you know the expiration terms, keeping the miles active is usually fairly easy. If you have a frequent flier credit card affiliated with the airline, simply make regular charges to the card. You can also opt to redeem miles for an airline ticket or other rewards benefits.

Of course, if you have many airline miles credit cards or frequent flier accounts it can quickly get confusing to keep tabs on each account. Instead, consider keeping just one frequent flier program or airline miles credit card and using up the rewards on your other accounts. Frequent flier miles have been losing their value very rapidly, so you are better off using your miles sooner rather than later. The frequent flier miles needed to book a free flight have gone up quite a bit, in some cases as much as doubled over the last year.

Published: December 21, 2009