Alaska Cancels Award Tickets, Citing Fraud — Are They Justified?

Here’s an interesting situation that I’d like to share my take on, and I’m also curious what you guys think.

Airlines trying to stop mileage brokers

Generally speaking, loyalty programs have rules against selling or bartering your points. It’s not generally illegal, but rather violates the terms and conditions of the program.

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Airlines go to great lengths to try and stop mileage brokers, as brokers are typically selling first and business class tickets at a discount, and airlines are worried it harms their revenue.

There are many ways airlines tackle these issues — most commonly they’ll close your account, or they may cancel award tickets you’ve issued that they suspect violated the rules.

What activity raises red flags?

As a general rule of thumb, here are some of the factors that may make airlines suspicious of your behavior. Before I list them, let me clarify that individually none of these should be a problem, but when you combine factors, it could set them off.

Some of these things include:

• Creating a new frequent flyer account and then buying miles shortly thereafter
• Buying a lot of miles in a short period of time
• Issuing award tickets for last minute travel
• Issuing award tickets primarily for people other than the account holder
• Issuing award tickets for travel from or within Asia
• Issuing award tickets for travel in first & business class on partner airlines

Again, individually all of those factors are fine, but when you combine some of those factors, your account is more likely to get flagged.

I do briefly want to clarify the last point. Airlines seem to have reason to believe there are lots of mileage brokers in Asia. For example, Alaska doesn’t let you issue award tickets within 72 hours of departure for intra-Asia travel for this very reason.

A reader had nine award tickets canceled

I get emails more often than I’d like from readers claiming a frequent flyer program canceled award tickets, claiming that the member violated rules.

This has been a legitimate problem with Flying Blue, at least in the past. However, beyond that, airline fraud departments are typically really, really good at their jobs, and a vast majority of the time they get these things right.

Back in the day I’d always engage when I got one of these emails. Unfortunately I found that in almost all cases, the person was in fact a mileage broker of some sort, and they just got caught and weren’t happy about it. No one likes getting caught, but I’ve also found that almost no one is upfront about the details, and it’s only after prying a bit that I find out why the situation happened.

That brings me to a comment recently left by a reader, who found her Alaska account blocked and her confirmed tickets canceled. Here was her initial comment:

I made a purchase of Alaska Mileage Plan and I redeem it for my family.
It went through smoothly and they have already made a reservation for hotel, attraction ticket, etc.
And suddenly I got the mail that my alaska account have been blocked and they will cancel all my redemption flight.
There is no information nor warning for limitation to redeem it for other traveler since I could reserve it for my family.
And I am very new to Alaska Mileage Plan program and after I saw your post about Alaska Mileage Plan I am interested to make an account and gift them a gift for flying.
Do you have any suggestions regarding this matter?

She sounded sincere, so I’ve been corresponding with her by email. Here’s what I’ve been able to ascertain, based on her side of the story:

• She lives in Indonesia and opened her Mileage Plan account in April
• In early May she purchased a total of 225,000 Alaska miles (150,000 miles plus a 50% bonus); that’s exactly the annual limit Alaska has on purchased miles
• She booked a total of nine business class tickets across four different flights on Japan Airlines for travel fairly last minute
• She isn’t one of the travelers, but rather she claims it’s her family members traveling, but their last names aren’t the same (as is often the case, especially in Indonesia)
• A few days after booking she received an email saying all of her tickets were canceled, and they offered to refund her for the miles purchased

In response to this reader’s email to Alaska, the airline stated the following:

The terms of our program are clear that it is a personal account and not to be used to purchase tickets for others. Please review what you agreed to when you joined by going to our terms and conditions. Below is a portion of what you agreed to when you joined our Mileage Plan and in your case you are the travel arranger for other people.

Travel agents, travel arrangers and unauthorized brokers are not permitted to issue Mileage Plan tickets or to process or facilitate any other Mileage Plan transactions (including Mileage Plan account creation, account inquiries, and mileage or award ticket transfers) on behalf of others. If Alaska Airlines becomes aware that a member or a third party has misrepresented his/her identity in order to perform a Mileage Plan transaction, Alaska Airlines may, in its sole discretion, void the transaction. Miles or award tickets issued, transferred or obtained in violation of these conditions of membership are voidable, in Alaska Airlines’ sole discretion.

My take on this situation

The reason I’m writing about this situation is because I’m torn. Let’s assume for a moment that this reader is being honest, and isn’t a mileage broker. I didn’t ask her for birth certificates or proof of family or anything, because I’m not sure there’s anything I can actually do here to help, other than to share my thoughts.

Alaska’s rights in canceling tickets

Alaska claims in their terms that they can in their sole discretion both cancel Mileage Plan accounts, and also void tickets issued with miles. Personally I’m not 100% sure that would hold up in court. I could see the argument regarding closing a Mileage Plan account, but can they really at their sole discretion void a confirmed mileage ticket?

The point is, the airline is claiming that the policy isn’t “innocent until proven guilty,” but rather that they’re the judge and the jury.

Was the reader a “travel arranger?”

Let’s assume it’s true that the reader was in fact booking tickets for nine different family members, and that she’s not formally a mileage broker. Alaska’s assumption here seems to be that she was paid some sort of consideration for making this all happen out of her Mileage Plan account.

For example, she wouldn’t be violating the rules if she truly paid for all the miles and wasn’t expecting reimbursement from anyone. I know I’ve certainly bought miles for tickets for my parents and covered the cost, though I usually don’t do so for nine people at once.

But if she was being reimbursed by them, chances are she was getting something out of it, whether it’s taking a small cut, or even just the credit card points for the transaction. Where exactly this falls on the scale of being a “travel arranger” and violating the rules, I don’t know.

How this situation could have been avoided

I imagine none of this would have been an issue if several Mileage Plan accounts were instead opened, and that the account holders were also the passengers.

Bottom line

I’m really torn on this:

• I totally see how she set off red flags in Alaska’s auditing department
• This situation could have likely been avoided by creating individual accounts for the travelers

Assuming it’s true that she was booking award tickets for family, that still raises the question of whether she was violating the rules. It’s not entirely clear, but then again, Alaska seems to think they can unilaterally make that decision.

What do you guys think — based on what we know, is Alaska in the right here, or does the reader have a legitimate gripe?