Senators question airline frequent flyer programs, citing reports of 'unfair' practices

Two senators are asking U.S. regulators to address "unfair" practices in airlines' frequent flyer programs.

In a letter sent Monday night, Dick Durbin, D-Ill., and Roger Marshall, R-Kan., asked the Department of Transportation and the Consumer Financial Protection Bureau to help "protect consumers against unfair and deceptive practices in airlines' frequent flyer and loyalty programs." The programs encourage customer loyalty with a system where they can accumulate points that they can then redeem for travel with the airline or other rewards.

"While these programs may have originated to incentivize and reward true 'frequent flyers,' they have evolved to include co-branded credit cards and now often significantly or exclusively focus on dollars spent using these co-branded credit cards," Durbin and Marshall wrote in the letter they sent to the agencies.

The letter cited reports that "airlines are engaged in unfair, abusive, and deceptive practices with respect to these loyalty programs."

Durbin and Marshall's letter said the airlines can make changes to their loyalty programs without notifying the consumer; that there's a disparity between the value of points at purchase and at redemption; and that the charge for transferring points is so steep that consumers ultimately lose the value of the points in the transaction.

An industry analyst predicted that the airlines will push back on the lawmakers' letter.

"I expect the airlines are going to fight this aggressively and paint a picture of doom," Henry Harteveldt said. "There's going to be some drama around this, that's for sure."

"Airlines have been changing the value of their loyalty program credits for decades," Harteveldt said. "This is not new. And airlines have constantly been changing the benefits people receive and don't receive."

The senators on Monday also asked how the DOT and CFPB are planning to address the airlines' practices and if they have the regulatory authority needed to protect consumers.

A DOT spokesperson confirmed that the department received the letter and plans to respond to the senators directly. A CFPB spokesperson said they received the letter and are reviewing it.

Harteveldt, the analyst, said the letter brought up valid points.

"I do think there is some merit to what they want to explore in this," he said. "Do airlines provide enough transparency into their programs? Are they truthful enough with consumers when enticing them to sign up for the loyalty programs?"

Earlier this year, Durbin and Marshall introduced legislation to increase competition in the credit card market and bring down swipe fees.

The airlines have spoken out against that bill, saying it would devastate rewards programs.