Six men are looking at up to 20 years in prison on wire fraud charges, in a case that involves frequent flyer miles.
Millions of frequent flyer miles stolen
The Unites States Attorney’s Office for the Northern District of Texas has charged six men with committing wire fraud in August 2019, in a scheme in which they allegedly stole millions of frequent flyer miles.
A federal grand jury has indicted a 43 year old man from Zgierz, Poland, who is the lead defendant, along with five other men ranging in age from 30 to 55, who are from California, Oklahoma, and Texas.
The lead defendant was arrested in Poland in May 2020, and following a successful extradition request, he was handed over to the FBI this past Friday morning, and flown from Warsaw to Dallas over the weekend. He made his initial appearance in court this morning.
According to the indictment:
- The man allegedly hacked into consumers’ airline frequent flyer accounts, and used compromised accounts to book flights for unsuspecting passengers who had purchased travel through the other five defendants
- The US-based passengers would send their requested itineraries and personal information, including names and dates of birth, to one of the five men
- They would then send that information, along with a money order, to the lead defendant in Poland
- He would then book those flights with fraudulently obtained miles
- He would then send the confirmation numbers to the men, who would share it with the passengers for travel
Of course it’s worth remembering that defendants are presumed innocent until proven guilty. If convicted, each of the defendants could be looking at up to 20 years in federal prison.
I’d be curious to know the scale of this
While it perhaps doesn’t matter one way or another, I’d be intrigued to know the scale of the theft here. All that we know is that it involves “the loss of millions of earned airline miles.”
For example, two million miles would be “millions,” and at a valuation of about one cent per mile, that would be worth about $20,000. Split across six people that’s not necessarily a huge amount. Of course that doesn’t make it right.
It’s more that I’m curious about how big of an operation this really was, since booking tickets with stolen frequent flyer miles seems like it would get caught pretty quickly and is also extremely risky.
The risks of online ticket brokers
We don’t yet know exactly how these men found the clients they sold tickets to. Regardless, this is a good reminder of the risks of online ticket brokers. There are all kinds of ticket brokers out there who claim to have access to discounted first & business class airfare.
While it’s possible that some are using legitimate consolidator fares, often they’re simply using others’ frequent flyer miles, in violation of most frequent flyer program terms & conditions.
Now, to be clear, these often aren’t stolen frequent flyer miles. Rather these brokers often buy miles and then resell them. This generally isn’t illegal (at least to my knowledge, as a non-lawyer), but rather just violates the terms of frequent flyer programs. Of course stealing frequent flyer miles absolutely is illegal.
Six men are being charged with wire fraud for stealing millions of miles, and then using them to book tickets for clients. Presumably the wire fraud charges are due to payment being accepted by wire. I’ll be curious to see what comes of this case, and what kind of scale we’re talking about.