Schumer wants probe of frequent flier mile claims

AP News
Posted: Nov 22, 2009 8:22 AM

U.S. Sen. Charles Schumer is calling for a federal review of complaints by consumers that they are losing millions of frequent flier miles without notice in confusing agreements.

He wants to establish industry rules for frequent flier programs that are billed as a free benefit to help attract and retain customers. There are few restrictions now on how airlines can manage and redeem the miles.

Schumer says he suspects consumers are actually paying for frequent frier programs through air fare and fees. If so, he said rules are needed to protect consumers. He's asking the Department of Transportation to review the complaints.

"As the holiday travel season approaches, we cannot let airlines and credit card companies continue to fly off with hard-earned frequent flier miles," Schumer said in an announcement scheduled for Sunday. "When a consumer accumulates valuable frequent flier miles, they should not have to constantly worry that they are going to expire with little or no notification from the airline."

InsideFlyer magazine finds the lack of consumer protections on frequent flier miles a common concern. Complaints include miles expiring without clear notice and a frequent change in the value of the miles, according to magazine spokeswoman Michelle O'Neill.

Other complaints include confusion over how many miles can be accumulated for certain trips, O'Neill said.

Ten trillion unused frequent-flier miles worth $165 billion are in circulation now, Schumer said. But 20 percent of them may never be redeemed, he said.

Frequent flier model programs began 20 years ago, most with no expiration dates for the benefits. In the last decade, airlines have created three-year windows for consumers to use the miles, Schumer said.

The Air Transport Association, a trade group for airlines, said each air carrier tailors its frequent flier miles programs as they see fit, often based on consumer interest. The group has seen reports of consumer complaints but doesn't track them. The system hasn't been targeted by regulators, they point out. The group says frequent flyer programs remain popular with consumers and airlines try to make their programs as lucrative and consumer friendly as possible to attract and retain customers.