New “Midnight Regulation” Means Less Oversight Of Unfair And Deceptive Airline Practices

The Department of Transportation is the primary regulator of airlines. Under the Airline Deregulation Act, states cannot regulate most airline practices. And under Supreme Court precedent, consumers cannot even sue airlines using state-level contract claims like a ‘duty of good faith and fair dealing’.

As a general matter, the Department of Transportation is the primary avenue passengers have to see redress when being treated unfairly or otherwise harmed by an airline. Since airlines can’t be as heavily regulated as other industries elsewhere, and lawsuits against them are harder too, DOT was granted broad latitude to combat “unfair and deceptive” practices by airlines. (DOT still improperly ignores consumer complaints they shouldn’t.)

In the closing days of the Trump administration, the Department of Transportation moved to narrow what they consider ‘unfair and deceptive’ with a new final rule that will serve to tie the hands of future Departments of Transportation who might seek to regulate airline behavior.

DOT says they’re ‘providing clarity’ on what constitutes unfair and deceptive practices. What they’re doing is narrowing it and future DOT rulemakings will be required to use these new definitions.

As defined by the final rule, a practice is “unfair” to consumers if it causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition. The final rule also states that a practice is “deceptive” to consumers if it is likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter. A matter is material if it is likely to have affected the consumer’s conduct or decision with respect to a product or service. Proof of intent is not necessary to establish unfairness or deception.

In addition to narrowing the standards under which DOT can consider something to be unfair and deceptive, airlines will be able to request an evidentiary hearings to dispute whether a practice is unfair or deceptive.

DOT says this is good for the public because it provides “greater transparency and predictability,” meaning in effect we know in advance there will be less consumer protection.

These changes amount to fulfilling the long-standing wish of airlines to be regulated the way other industries are at the federal level, effectively mirroring Federal Trade Commission rules – but without giving up their immunity from state

It will requires a three-pronged analysis before adopting new rules deeming airline practices unfair or deceptive and require evidentiary hearings before most new rules are adopted.

…The definitions are modeled on the Federal Trade Commision (FTC) standards on unfair or deceptive practices.

That said it could have been worse – Spirit Airlines argued that merely deceiving a consumer shouldn’t be enough to consider a practice deceptive, rather they wanted a rule which said a “practice must be misleading to “consumers” in the aggregate” and airline lobbyists wanted DOT to agree only to take action against then where they had evinced an intent to deceive consumers. Both of these were rejected.

The new rule was issued over Thanksgiving weekend, when fewer people may be paying attention, and may be considered part of the current administration’s midnight regulations or rule changes pushed through at the last minute before executive agency leadership turns over under a new President.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Go figure, an Administration that favors the rich and their businesses kicks the consumer in the butt on their way out the door.

    The good thing is that they LOST.

  2. Hi Gary,

    Worth mentioning that due to COVID-19 there have been a high number of cancelled legislative days. Consequently, the number of APA rules susceptible to the CRA and enacted before the end of Mr. Trump’s term is atypically large and my gut tells me that a simple majority can be found in both houses to overturn something like this.

    Cheers

  3. LoL, “midnight regulations” but Trump isn’t out of office yet.

    Meanwhile, Biden is not the President-elect yet, either.

    Don’t get me started on voter fraud

  4. @John L

    Maybe there was voter fraud. Biden was leading by double digits in the polls and I say the polls were correct. The fraud was all perpetrated by the Trumpsters.

    Oh yeh, and Trump still lost. Hee, hee.

  5. Love to see how Trumpettes like Jon cheer while their rights as consumers are trampled on. By their Dear Leader

  6. @JohnL
    For all the of the voter fraud conspirators, I’m sure glad that there is proof of voter suppression efforts conducted by certain states / legislators.

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