By all outward appearances, Ari and Shanna Nachison did what airline loyalty programs want their best customers to do. They joined American Airlines’ AAdvantage program, signed up for American-branded credit cards and then started collecting miles. By early 2020, each of them had more than 550,000.
Then American shut down both accounts.
When asked why, the airline said only that the couple had violated “the general AAdvantage program conditions,” but it didn’t say which ones. The miles disappeared along with the accounts.
In a federal lawsuit filed in California, the Nachisons said the closures appeared to be tied to the co-branded credit cards they had opened. They insisted they didn’t commit fraud or break the card issuers’ terms. The case was settled last year.
If a bank did this to you, regulators would want a word. In fact, they do. Earlier this month, the Consumer Financial Protection Bureau announced an initiative to investigate “debanking” by the nation’s largest financial institutions. Part of the inquiry is whether banks skipped sending the notices the law requires.
When an airline or hotel chain throws you out of its loyalty program, it doesn’t have to explain itself. It doesn’t have to return your points, either. Maybe it’s time we took these loyalty program debanking issues as seriously as a closed bank account.
“Sole judgment” means what it says
Unlike banks, airlines don’t have to explain themselves to anyone.
Just ask Rabbi S. Binyomin Ginsberg. He joined Northwest Airlines’ WorldPerks program in 1999 and reached Platinum Elite, its top tier, in 2005. In 2008, Northwest revoked his membership. It cited 24 contacts with its customer service office over several months and said he had “abused” the program. The contract let Northwest make that call “in its sole judgment.” Ginsberg sued. In 2014, the U.S. Supreme Court unanimously ruled against him. It said federal airline deregulation law preempted his claim that Northwest had broken an implied promise of good faith.
A similar thing happened to Steven Rothstein. In 1987, he paid American $233,509 for a lifetime AAirpass, which gave him unlimited first-class travel. He later added a companion pass for $150,000. In December 2008, an American representative handed him a termination letter at Chicago O’Hare, accusing him of fraud. Among other things, the airline said he’d offered his companion seat to strangers at the gate. Rothstein sued. In 2011, U.S. District Judge Virginia Kendall granted summary judgment in favor of American Airlines.
Jacques Vroom got his termination letter at London Heathrow that same summer. He’d paid $356,000 for his unlimited lifetime pass and companion pass in 1989. American accused him of selling his companion seat under a rule adopted after he bought the pass. The airline sued him in 2011. He countersued and they reportedly settled the case the next year. Lifetime, it turns out, is a flexible concept.
My advocacy team sees this type of capricious behavior from airlines all the time. We can’t restore a closed frequent flier account. When we ask why a member was removed, the company usually tells us the information is private. On the rare occasions it gets back to us, it says the customer broke the rules. Which rules? It won’t say.
Courts aren’t much help
I’m not aware of a single case where a member sued and won reinstatement or got the miles back.
In 1995, the Supreme Court did leave the door open a crack, allowing passengers to sue for breach of contract over retroactive changes to a mileage program.
But contracts favor the people who write them. Delta’s SkyMiles rules state that “miles are not the property of any Member” and that termination “will result in a loss of all accumulated mileage credit.”
George Lagen learned how that works. He flew 1 million paid miles on United Airlines, earning the lifetime status the airline had promised in 1997. After its merger with Continental, United moved million-milers down a tier. In 2014, a federal appeals court sided with the airline, ruling that the program rules allowed United to change benefits whenever it wanted.
What your bank owes you that your airline doesn’t
Bank customers have it better. When a lender such as a credit card issuer closes your account, the Equal Credit Opportunity Act treats that as an “adverse action.” You’re entitled to a notice within 30 days that gives specific reasons. When a bank closes your checking account, it has to send you your balance. A 2024 CFPB circular warned card issuers that taking away earned rewards when the issuer closes the account may be an unfair practice.
Britain has gone further. It’s moving to require 90 days’ notice and a written explanation before a bank closes a payment account, so customers can challenge the decision with the Financial Ombudsman Service.
Loyalty members deserve a version of those rights. A program that wants to close an account should explain why in writing, with evidence. Unless there’s active fraud, it should give notice before the account goes dark.
Members need the ability to an appeal to a human, plus an outside referee if that fails. The Department of Transportation already has authority to investigate frequent flier complaints. The Supreme Court said so in the Ginsberg case. A banned member should also be able to redeem or cash out miles earned by flying or spending rather than losing everything. The airline should take back only what it proves was obtained by fraud.
This isn’t about rewarding cheaters. Loyalty is a big commitment. People pay higher fares to stay with one airline. They take connections they don’t want, through hubs they don’t like, and pay credit card annual fees for years. A lifetime ban with no hearing shouldn’t be shrugged off. You get more due process for a parking ticket.
Take the Supreme Court’s advice
These programs are heavily weighted in the company’s favor. The company writes the rules, changes them at will and enforces them secretly. A member who objects can be removed for complaining too much.
In the Ginsberg decision, the justices offered unhappy members some advice. Customers, they wrote, “can avoid that program and may be able to enroll in a more favorable rival program.”
That doesn’t go far enough. Until these programs get fairer and more transparent, maybe we’re better off buying the least expensive ticket and skipping the points game altogether. Loyalty to your own wallet is the only program nobody can kick you out of.
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