Why won’t American Airlines refund my son’s airfare?

Even though Sampath Radhakrishna cancels his son’s airline ticket within 24 hours, his refund is missing in action. Now his credit card bill is due. Can the airline expedite the refund?

Question: I recently booked a flight for my son to fly from Los Angeles to Madrid through American Airlines’ website. Within 24 hours, I canceled the flight. My son spoke to American on the phone, and was told the refund will be credited to his credit card “soon.”
It’s been more than a month. My credit card payment is due in three days and the charge still shows as “pending review.” Can you help? — Sampath Radhakrishna, Cupertino, Calif.

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Answer: Your son’s reservation fell under the “24-hour rule,” which says that if you cancel an airline ticket within a day of making the reservation, you’re entitled to a full and prompt refund. (Certain restrictions apply for last-minute tickets.)

How prompt? Well, that’s the problem. When a refund is due, the airline must forward a credit to your card company within seven business days after receiving a complete refund application, according to the Department of Transportation. But the credit may take a month or two to appear on your statement.

Your son was at about the one-month mark. He’d been left with the impression that his refund would be issued “soon” and had interpreted that as less than a month. In fact, American would have been well within its rights to wait two months before returning the money.

Let’s pause for a moment to consider the absurdity of this situation. An airline is allowed to keep your money for two months — can you say “interest-free loan?” — while the rest of us must pay our bills promptly. Oh, and how long does it take American to withdraw the money from your son’s account? Seconds.

Something is just not right with this. American should have returned the money. In seconds.
This isn’t an American problem or even an airline problem. Corporate America creates rules that favor it and allow it to benefit from holding on to your money for a few extra weeks. I’ve asked executives about the sluggish refund process, and they’ve told me, with a straight face, that the problem is exacerbated by credit card billing cycles and overly cautious accounting processes. I think that’s nonsense. If they benefited from speedy refunds, they would have figured out a way to send you the money instantly. But they have no motive, so here we are.

A brief, polite email to one of American’s customer service executives might have shaken a check loose from the accounting department. I list names, numbers and emails on my consumer advocacy site.

I contacted American on your son’s behalf and it informed me that your refund has been processed — hopefully in time for him to avoid paying a big credit card bill.

3 thoughts on “Why won’t American Airlines refund my son’s airfare?

  1. If you have a pending bill for something they should be refunding you for quickly (but aren’t), I’d say a credit card dispute wouldn’t be out of the question. I doubt the refund ever would have showed up without intervention if it didn’t appear after a month.

    I disagree that AA met the law’s deadlines. As you said, the rule says AA has a week to tell the bank to issue a refund. The whole bit about “two months to appear on your statement” has to do with the vagaries of bank billing cycles, and nothing to do with the airline’s obligations. The refund should show up on your online account status as soon as the bank receives the notification from the airline.

    So, no, AA can’t wait two months to issue your refund, it’s just that it might take about that long for you to actually see it for yourself if you don’t use your bank’s website and the refund JUST missed the statement cut-off; the airline can neither speed that up nor slow it down.

    1. Agreed. When I know I’m owed a refund, I check the credit card website before I pay the bill. When the refund appears, I know I can deduct that amount from the payment

  2. I had a similar situation last year. I called my credit card company and sent them a copy of the refund transaction I had received noting the pending refund. My card company actually deferred the payment and did not charge interest after they confirmed with the company that the refund was underway. I was surprised they did this but it worked out well for me. The refund appeared two days after the payment due date so all was well.

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