Is there such a thing as too much consumer protection?


In many ways this seems like a silly question. How could it be possible that customers can be protected too much from companies they do business with, companies which generally speaking are operating with more information and more control of any particular transaction? And yet here we are, waiting for the dust to settle on the latest airline mistake and waiting to hear how the Department of Transportation, the group responsible for regulating the aviation industry, will rule on the situation.

I do not think that there is anyone out there is going to argue that the most recent situation with United Airlines – tickets to, from or via Hong Kong available for only 4 miles without any inventory restrictions – was a mistake. Unlike some other mistakes this isn’t even one that any rational person could claim was even close to reasonable. But that seems to matter less and less these days, in large part to consumer protection rules put in place by the DoT recently. In fact, the DoT has explicitly stated in their FAQ on the rules that "…the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a ‘mistake.’"

I understand writing the rule this way. It makes sense in many ways. It is a bright line that makes it nearly impossible for any situation to come down to arbitrary judgments or interpretations. The rule is what it is and there’s no way around that. So what happens when it really is a mistake, not a shady company trying to pull a fast one on unsuspecting customers? Well, rules are rules, right?

At this point the answer to that question isn’t entirely clear. A DoT spokesperson has been reasonably clear thus far on applicability of the rules vis a vis award tickets: just because they are paid with points which the programs claim are their property, not yours, the airlines cannot escape the rules there. So that part is cleared up. There are still a few things out there that I can see United playing to try to make this go away, and I’m sure they’ll try some I haven’t considered, too. But the question remains: If it obviously is a mistake should the company be held responsible?

The easy answer per the rules is that they should. After all, they are the ones who made the mistake, not the consumer. But does that necessarily result in the best protection for customers? Maybe not.

Yes, the customers affected by the mistake are going to get what they bargained for. But there is also the question of how that gets paid for in the end. In a case like this, where a mistake is made, does it end up being paid for by the regular folks, the normal consumers, who the rules are arguably supposed to be protecting? Put another way, if the company raises fares to cover for the mistake they made, does the greater populace suffer at the expense of the few? And isn’t that the antithesis of what consumer protection rules should be about?

Back when the 3-hour tarmac rule was implemented, and again just over two years ago when the DoT changed a number of other rules, I wrote about the underlying basis of these rules. It is a clause in the CFR which prohibits unfair and deceptive marketing practices. I called it a slippery slope, basically giving the DoT free reign very much in the same way the airlines previously held it.

It is hard to reconcile a "mistake" with "unfair and deceptive" some days. Is there a better way? Should there be?

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

28 Comments

  1. I agree with your points. UA wasn’t being unfair or deceptive by offering this fare, they just made a mistake, at their own expense.

    If it ended up being honored, then everyone who booked it should chalk it up to a victory of sorts, and should maximize their enjoyment on that itinerary.

    If not, the points go back, the money gets refunded, and everyone is “made whole” again, no worse off than they were before.

    I think that any person who makes a big stink about this is wearing their butt on their shoulders, and doing so quite obviously. The DoT need not get involved with this particular situation. Anyone who ponied up the eight miles for an Asian itinerary knew from the start that there was a chance (and probably a very strong chance) that the award wouldn’t be honored. Anyone who says differently just isn’t thinking in their right mind.

  2. We more or less paid for our fat finger mistakes on United before. Our team (3 people) alone wasted around $2k last year on united with all sorts of “fees” because of mistakes and/or unforeseeable situations.
    Now that united made some mistakes,I sort of want to see United man up and pay for their own mistakes or at least pay some change “fees”. Is this too much to expect?

  3. If I make a mistake booking a flight and want to change it, they charge me a fee to do that… these consumer protections make it fair.

  4. The point about regular punters paying for it eventually through higher fares is mis-placed. Competition will see to it that they cannot recover it that way. If they are forced to honor, which I suspect they will, they may well look to recover the costs through the FF program. But sounds to me like they have already pissed off all those frequent flyers anyway, so they just make a bad situation awful and we all move on. We may regret in years to come when MP becomes the new SkyMiles. But frankly I think we should take our wins when we get them. Your other point (in other posts) about the rules being so stacked against the consumer all the time (not just with UAL but with any large corporation) that it’s important to take the few chances you get to take advantage of stringent protections.

  5. The point that I see missed in most of this discussion is not that a error of epic proportions was made, but rather where do you draw the line?

    Rules on whether a mistake should be able to be clawed back need to be drawn in the sand like they apparently are, so that one day, far in to the future, some airline doesn’t say.. “you know, we really shouldn’t have sold those $99 fares. It was a mistake. They should have really been $149!”

    I think that is the sort of thing that consumers need protection against, and unfortunately, to make it clear what the rules are, issues like United is facing right now will arise from time to time. But at the end of the day, consumers are better off.

  6. If they are forced to honor cost should be made up in terms of miles forfeited in cancelled accounts. I for one hope they have the guts to do it if it comes to that.

  7. HikerT, why such a hater? Who does that benefit? Why would you want miles forfeited and accounts closed? If UA decides to honor these tickets let them enjoy their trip in peace.

  8. They could always create a “mistake fare prevention fee” ala Spirit’s “unintended consequence of DOT fee”

  9. I had an economics professor who once asked the class how we feel about safety in the trucking industry. After everyone said we wanted higher safety, even if it costs more, he asked what if we were shipping gravel, would we feel the same way?

    I say this because consumers want different things. I know if I buy a ticket on Spirit, I am not getting a good seat or any conveniences, and typically, I am saving a ton of money. I know if I buy a ticket on Jetblue or Southwest, I am getting a lot included. I know if I want to sit with my family, I should select a seat when I purchase the ticket, and try to use airlines that offer free seating. But if that isn’t important to me (if Im shipping gravel) why should I spend the extra money for a service I do not want? Why does the DOT pretend to know my preferences?

    I would rather the DOT spend its time educating consumers about the differences between airlines, rather than trying to run all the airlines as if they were the same.

    By forcing all of these regulations (3 hr, family sitting together, fare increases for mistakes…) airlines are forced to raise prices. I interned in an Ops center, and during one storm, I saw the effects of the 3 hour rule, 4 flights were cancelled, as well as their return from the out-station. Hundreds more people were stranded than necessary. Airlines with good service would find a way to appease customers using market forces, smaller airlines might strand customers for days waiting for open seats.

    lastly, I like that I have 24 hours to cancel a reservation, but doesn’t United get the same courtesy for this obvious mistake?

  10. I think that United should be forced to honor all reservations for flights within 24 hours, then they should be given 24 hours to reconcile (refund) any other fares just as you the consumer has the same rights.

    For 24 hours, the consumer likely isnt going to be blindsided and face a market that has different prices. This way, both sides have the same fair chance and it avoids the 99 vs 149 issues.

    But ultimately, this is also a consumer service excercise, and if United continues to hit its frequent flyers, people will leave…

  11. I still cant believe how long UA kept it online, and how long it took to respond.

    Anyone that has one of these reservations, have you personally heard from UA yet? Because FT is good, but there are certainly a lot of people who dont read it…

  12. Speaking strictly from an IT perspective, if a company puts so much faith in an automated system to book and ticket any reservation (writing and signing a contract on the company’s behalf) with no surveillance system in place (either human or automated) to look for something in the ticket (contract) that doesn’t fit “normal” parameters, flagging odd ones for human review before sending a confirmation email, they should have to eat the loss and honor the contract that they allowed an automated system to issue on their behalf. And then they need to invest in some real QA/test procedures.

    This was completely preventable and they took hours to figure out that some very bad code had made it into production (probably from reading blogs) because it was not adequately tested. And they obviously had no automated review of the tickets (contracts) moving from reservation stage to ticketing stage in place to catch this massive error. For this reason alone, without even considering any other factors, they should have to eat the loss.

    Just my 2 cents. And no, I did not participate in this feeding frenzy. But I did watch it occur, wondering why United is taking so long to even notice what they were allowing to happen.

  13. I would have loved it if United decided to give away first class flights to or through Hong Kong.

    The government should not make them do so.

  14. What if United cancels the tickets and zeros out all award availability on dates and routes that were booked? Perhaps this might not be a post-purchase price increase because the item wouldn’t be available for re-purchase, if an award ticket can be considered a separate class of item. (But of course United’s IT probably doesn’t have the ability to do this….)

  15. Max, are you saying I cant express my thoughts? And why are you stalking me? You are the pathetic one. Max, guy with a dogs name, go plat fetch. Lol

  16. Seth, intentionally or not, I think you are missing some important considerations:

    1. Who was best placed to mitigate this error? Obviously United benefits greatly from the online res and ticketing system generating substantial scale and return. The robustness and QA/QC of system is in their purview, they failed here. I imagine this loss is overcome by the benefits best derived.

    2. The people that bought acted rationally and in a sense enabled the market to come back to equilibrium, regardless of the morality.

    3. Why does UA get sympathy on this when the general trend by airlines has been to give no quarter for a service that even the best intentions can be ruined by life? The 24hr cancellation rule that ive seen cited, a false equivalence at that, as why the DOT no-cancel rule is rather unfair was a response to the ridgedness that was pervading air travel to the consumers detriment to the point a policy response, albeit a limited one, was put in place.

    4. How many people have searched airfare and during the booking process the fare is gone or has changed?

    5. the cat And mouse game airlines play with their customers has come home to roost, morality went out the window with things like TOD upgrades.

    6. The right level of protection for consumers depends on what policies the airlines continue to pursue, as they are in a position of strength relative to a single consumer with no real bargaining able to happen.

    Finally, in a balanced world United would acknowledge they built the system, wouldn’t, but for DOT rules, necessarily be accommodating to passengers in similar situations, and will suffer a substantial cost especially for partner flights, and therefore offer (a) roundtrip anywhere in north America in economy with top privilege for complimentary upgrade to be used in next 18months in exchange for partner flights, (b) for those on all united itineraries it’s honored but no changes, unless you agree to take it in economy over next 12mths with a guaranteed standby upgrade to the next highest available class, or (c) 30k miles.

  17. Firstly, in full disclosure let me say that I used to work for CO (now UA). My responsibility would be to make your butts happy during this type of situation.

    Look, its clearly a mistake as you say and I find it really sad, that they are being held to it. The people who bought the ticket all know that the fare was incorrect as they know the cost of such a journey. Sometimes I have to wonder the things that are slated in the name of consumer protection.

    I never understand why some consumers want something for nothing. Its pretty clear that its more than 4 Miles to get to Hong Kong. Really now.

    In the past, the company has honored fare errors, but looks like they are now taking a stand; you know what times have changed. I think there was another airline (http://www.elliott.org/blog/sorry-those-40-fares-on-british-airways-werent-for-real/) that had an error and refused to honor the tickets as well, so this is not uncharted territory.

    The same flyers that the company goes out of their way to help are now dragging them through the mud, the irony.

    Sigh…

    And Matt, if you make a legitimate error while booking a ticket 9 times out of 10 they will allow you to make the change if it indeed was a legitimate error. Just call and talk to an agent they can look at the transaction and make a determination.

    Oftentimes, people do a lot of devious things so its hard to determine when a customer is telling the truth about making an error. But most times they will be given the benefit of the doubt. its just good customer service.

    A deal is not a deal when you get it at the expense of someone.

  18. What is being lost in this is that United made an extremely tiny error, of all the possible tickets bookable on their website, only this one was found to have a weakness, which under normal circumstances would have only impacted a handful of customers legitimately intending to book travel to Hong Kong. It was customers that found this minute error and exploited it to the extreme, fully intending to put United in this difficult situation of either to honor the tickets and take the cost loss or to get raked across the coals in public relations. This is more a customer-led sting operation than something of United’s doing, and the intent from the participants is purely self-serving. Airlines with their 24/7 online booking tools are particularly susceptible to this, plus they are the big companies that so many love to hate. I am still trying to find an analogous example where people think similar activity is defensible.

  19. I think the rules will eventually evolve. They are not perfect, nothing is. It is a good step to have some protection because there can be deliberate bad actions. I would make it so.that both airline and customer have the same 24 hrs to cancel, or be locked in unless they pay a fee to the other.party.

  20. Not exactly an analogy but imagine if you were to participate in this (essentially) scam on a much smaller business. The sort of size where such a mistake would essentially mean the business would go bankrupt should they be forced to make good on their mistake. Now imagine if the owner of this business called you personally to ask if you’d do the right thing and voluntarily cancel the ticket you knew full well from the beginning was gotten by simply taking advantage of an obvious glitch in the system. How many of these ill-gotten ticket holders would say “no” and justify their greedy behavior by pointing to some blanket statement by the DOT? Hopefully no one. Yet when the size of the business in question is one that could probably absorb such a scenario, the standard of behavior completely changes.
    I personally had 6 tickets all set to go and priced out at the mistake 4 miles per person cost but couldn’t bring myself to click the purchase button. I had to admit to myself thtake eying to get something of extreme value for free at the expense of someone else’s unfortunate and innocent and glaringly obvious mistake doesn’t meet my standard of personal integrity. Even if the biz I’m trying to take advantage of could theoretically absorb the costs. My integrity doesn’t vary depending upon the size the business I’m dealing with.

  21. whatever happened to people,s integrity, all this nonesense from deadbeats who want to fly first class for 4 miles? You knew it is a mistake before you booked, sure airlines charge you fees when you cancel etc but it is always disclosed , part of their business model. Sure we all want free miles, free travel etc, but there are legitimate ways to go about it , bankrupting an airline will cause thousands to lose their jobs, or fares to go up for all paying passengers, just because someone thinks they have the right to fly 1st class for 4 miles. And the worst part about this incident is those who booked and took off same day, excuse me? what do you do for a living? probably on welfare? United should ahve cancelled their return tickets , let them stay in Kong Kong for a while. I apologize if i upset some people, but i got tired hearing about people thinking they were taken for a ride and want compensation

  22. Of course everybody knew it was a completely unrealistic mistake. In fact, there was never any attempt to United to deceive, there was no publicity or promotion, and indeed on the screen where the points were deducted, there was also a listing of the correct mileage that should have been. I have no objection to going with gusto for all the miles and points that are out there, but some people seem to have an enormous sense of entitlement. And I agree that DoT’s micromanaging may sometimes benefit some consumers, but often at the expense of others, and often in needlessly meddlesome ways.

  23. Noah, I guarantee that every last one of the people who booked that 4-mile fare has heard all of the follow-up too. There were no naive innocents among that bunch.

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