There is a very important lesson, that’s easy to forget sometimes. Your frequent flyer program is lying to you (although some lie more than others). There’s no purity here, so the offenses are all relative and need to be kept in perspective.
Still, United coming right out and saying that they don’t keep their promises and don’t need to should be galling.
Despite explicitly promising in late 2011 not to take away benefits or confirmed upgrades from million mile flyers, United did exactly that in early 2012.
A lawsuit was filed for breach of contract, with one suggesting being that the million miler program was separate and apart from MileagePlus itself and the latter’s claim that members have no rights and United could do whatever it wished wasn’t a get out of jail free card.
Back in January of this year United’s “our fingers were crossed” defense succeeded, the lawsuit was dismissed, with a Court holding that United couldn’t be kept to its promises.
The dismissal was appealed, and Wandering Aramean summarizes the proceeding.
Under any claim against United, a Court can’t read state contract rules into the dispute (such as a covenant of good faith and fair dealing) under Northwest vs. Ginsberg. United basically says that they can do whatever they wish, ending the lifetime status program whenever they wish. United’s position is that the consumer remedy is to complain to the DOT, which doesn’t regulate frequent flyer programs.
Lifetime means lifetime ‘unless we change our mind’:
Judge Hamilton: To understand the difference between lifetime and fingers crossed? That lifetime doesn’t mean lifetime?
United: That lifetime means lifetime unless…
Judge Wood: Unless we change our mind.
Judge Hamilton: Unless we change our mind.
United: Yes, that’s exactly right. That’s the case.
I did love seeing what I dubbed back in January as United’s “but our fingers were crossed” defense showing up at oral argument! That’s a great way to capture United’s unfair behavior and their legal position, I think.
Judge Wood makes this important point more broadly:
I feel as though maybe they should say “Don’t rely on anything we say at the top of every page” and people would probably be well advised to probably take that thought.
Put another way, they should just stick this at the top of every page of United.com.
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I love the arguments that people get into about the “morality” of churning credit cards and the like to get miles, as if there were an a priori morality that both corporations and consumers needed to follow. Capitalism is wholly amoral – which sometimes makes it effective, and sometimes makes it horrible (c.f. the NFL).
“Consumers” need to stop binding themselves to an arbitrary sense of morality when the corporations clearly have none.
Gary,
Given this ruling does this not legally apply to all the other frequent flyer program’s out there?
Should there be legal remedies out there that the states or federal government laws should address?
This is bad blogging/journalism to get a link hit. United isn’t lying; United, like all airline FF programs, reserved the right to change its terms. In this case, the UA Lifetime Gold FF is claiming injury/breach of contract because UA ADDED another higher tier (Platinum) when UA merged with CO–the injury being there now is a higher elite tier that can gain complementary upgrades or perks before a Gold.
The fact is that UA merged with CO and adopted CO’s tier levels post-merger. That seems perfectly reasonable. But UA Golds now receive about the same benefits as Golds before, so the customer’s LIfetime status has barely been affected–I know, since I also was Lifetime Gold premerger. Yes, there is an additional tier of Platinum with better chances for upgrades before Golds, but there were that many more Golds before who similarly had better chances to dilute my chance for upgrades. The impact is negligible. This customer is simply screaming at the rain at the perceived loss of benefit when that is ridiculous.
Yes, UA is making the legal argument that it has the right to change its benefits and program at any time it chooses. It has only done so in terms of devaluing its miles, which all airlines do, and in merging and thereby having to adjust its elite tiers. That seems fair to me. UA is doing nothing that SW/AW didn’t do when they merged or when DL/NW merged, and now we’ll see AA/US do the same when they merge. Mergers create change, and that is to be expected–and is completely legal or the DOT/DOJ would not have permitted the merger in the first place. That is the cost of doing business, and this customer is simply looking to get something by the cheap stunt of suing for that benefit…that isn’t deserved. Talk about a frivolous suit.
I am all for airlines being held accountable, and I would support a US Airline Bill of Rights as they have in the EU. But this is nothing more than a cheap stunt from a whiny customer who doesn’t like the change that is happening and is blaming UA. Suck it up.
Whatever the legal merits, and eventual outcome, it sure doesn’t help UA from a PR perspective to have its own lawyers admit that it doesn’t mean what it says.
Under anyone’s logic United was absolutely lying.
I don’t see this as different from selling some sort of membership and then revoking it. In which case you would expect a lawsuit. UA benefited from all the business, giving the customers the explicit expectation that there would be “lifetime” benefits accrued at a certain level. While United should be allowed to make suitable substitutions they need to honor in spirit the benefits they promised. Obviously gold is not worth what it was if there are now 4 tiers, so the Million Milers should be given Premier Platinum status (or alternatively Premier Platinum should be abolished). As far as upgrades, they could give the option of the spouse benefit or upgrades. I suspect most would choose the Spouse benefit anyway. Same goes with the 2MM benefit. These obviously would only apply to those at those levels at the time of the merger. No one can have any issue with changing the program going forward.
@Michael que – under current precedent there are very limited avenues indeed against a frequent flyer program. I do think that will eventually be reversed, the Ginsberg decision reflected frequent flyer programs as they used to be but now that 2/3rds of miles are earned via partner transactions they won’t ultimately receive federal pre-emption from state court remedies. Just a matter of (a long) time.
@Bill,
I’m also a million miler from PMUA and yours is also not a fair representation of what United did. They did not only add a tier above Gold, they took away 2 RPU’s that PMUA repeatedly designated as an annual MM lifetime benefit. In fact, it was not just PRE merger UA, but also POST merger UA who promised these benefits would not change before yanking them away and saying, GOTCHA! They claimed that the added benefit of status match for MM spouses made up for this, but many did not/do not see it that way.
I, for one, would not really fault UA for just the tier issue, but taking away a long promised “lifetime” benefit was disingenuous and really indicative of how UA was going treat their customers in the new company. I’ll let the courts determine whether it was legal to actively market a claim that was untrue, but I don’t think anyone can claim it was fair to their consumers who relied on these assurances when giving their loyalty to UA.
The lawsuit was stupid as hell from the get go and it is sad it took so long to get thrown out. Don’t act like every other program doesn’t hold the exact same belief that they can change when they want and their TOS stipulate they can do exactly what United did.
I am a pre-merger MM flyer. The simplest solution for UA would have been to grandfather (I am also a grandfather) existing MMs when they made the change and then have new terms for new MMs. After all, pre-merger MMs are a dying class (literally) and after a time the issue to UA would be moot.
@Kris:
So if all husband cheat on their wives, I can too?? That is a stupid argument. Just because other FFP are scumbags too does not make UA good, better or moral.
UA is lying, fucking with their customers and getting away with it. So going forward, I know who to trust.
@ Kris and whomever: Sure, no one said a FF program can’t change. If you got your tier for the year , then it should be honor for the year. If it was for a lifetime then it should be honor for the lifetime. If you were promised a lifetime of something then you should be grandfather into that regardless of how the future may change. That was just pure dumb business sense on United’s part and someone there should seen an inevitable lawsuit light bulb in their head. Seriously, this is America after all!
This is why FF programs need regulation. Its not just UA saying they lied, its the entire basis of FF and points programs being a house of cards. They can devalue, change rules, or do anything, without threat of reprisal. Think about what would happen if your bank told you your savings is worth half? This is not just UA, they happen to be the ones in court today. When a ‘currency’ is issued, people will try to make sure it is as one-way as possible. Which is what we are seeing now. This is why government regulation is always needed. Profit motive steers all.
@joelfreak – well, I think we’re left in an odd spot when legislation says that federal government pre-empts state courts and the supreme court says that applies to frequent flyer programs. Federal regulation is going to be utterly perverse here, but we’re already in a bizarre world where there’s no remedy through torts. The better solution of course would be to overturn Ginsberg, which I do think will happen (eventually).
People are surprised by this? This country runs on facade and deception today. In America, the better deceiver you are, the more you will achieve; the only exception being academia.
All the worlds a stage – America has taken that and run with it.
Gary – I’m a million lifetime miler with United and still have over a million miles in my account with them, but am having a hard time using them. When I was a 1K I could create an award reservation (or several) and cancel some or all without penalty. Now that I’m a lowly million miler and just a gold lifetime, I can no longer do that (this is actually the only benefit that was taken away from million milers that I actually care about). Are you aware of any way (short of becoming an annual 1K again) whereby I can book and cancel award fares on United without getting fees? Thanks, Rob
@Rob well you can still cancel without fees within 24 hours. And the fees really aren’t bad for a gold..
@Gary I’m honestly surprised how the courts allow the airlines to change their frequent flyer programs without any notice especially when they sell their frequent flyer miles for cash. What other business allows a person to sell something and say its worth 50% the very next minute?
Will the law allow me to issue a gift card for $50 and the very next minute claim its only has $25 because I changed the terms?