Is it Legal to Sell My Airline Miles for Cash?

Dear Tim,

Is it legal to sell my airline miles for cash? I’ve heard conflicting reports on this and haven’t been able to confirm either side of the story.

Jerome

Dear Jerome,

You will find nothing in the legal code at the municipal, state, or federal levels that prohibits the sale of frequent flyer miles. In fact, there’s nary a mention of loyalty miles or points anywhere in this country’s published laws and statutes.

Nevertheless, you may not sell your airline miles for cash.

Who says so? The airlines do. And when you enroll in their programs, you implicitly agree to abide by the terms and conditions laid out in the member guides, even if you don’t know what those terms and conditions are. And yes, as is the case with the restriction in question, even if you disagree with the rule.

In American’s program, the world’s largest, the prohibition is stated as follows: “At no time may AAdvantage mileage credit or award tickets be purchased, sold, or bartered. Any such mileage or tickets are void if transferred for cash or other consideration.”

While the above clause is buried beneath a mountain of legal fine print, it’s there. And it’s unequivocal. All programs with which I’m familiar have similar verbiage in their terms.

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Because, as a practical matter, it is relatively easy to sell frequent flyer award tickets—either directly or through what are usually referred to as coupon brokers—the follow-on questions typically concern enforcement (Will I get caught?) and penalties (What happens if I am caught?).

To the first question, I have not met or corresponded with a single person who was busted for buying or selling frequent flyer miles. On the other hand, I have heard from many people who have engaged in such transactions. Based on this admittedly limited evidence, my best guess is that only a tiny fraction of those in violation of the rule are ever discovered and apprehended.

As to the question of penalties, the airlines waive a big stick.

Again excerpting from American’s rulebook: “Violators (including any passenger who uses a purchased or bartered award ticket) may be liable for damages and litigation costs, including American Airlines’ attorneys’ fees incurred in enforcing this rule.” The threatening language continues, warning that buyers will have their purchased tickets confiscated, and that offenders’ AAdvantage accounts may be frozen and their miles forfeited.

So, briefly, the airlines’ position is simple: Don’t sell your miles! And while detection is unlikely, if they do catch you, the airlines will administer punishment swiftly and surely.

While it’s unclear how much effort the airlines have invested in detection and enforcement, it’s obvious that they’ve put considerable resources behind the legal and communications aspects of the policy. And in so doing, they’ve incurred the enmity of many of their otherwise loyal customers, who feel strongly that they should be free to dispose of their miles as they see fit.

Why do the airlines bother?

Behind their efforts in this area is their concern for the “integrity” of the distribution system. Simply put, they want to maintain as much control as possible over the prices charged for their tickets. And the sale of frequent flyer award tickets creates a free-for-all in the marketplace, wreaking havoc on the ticket prices available through approved channels like travel agents and the airlines themselves.

In today’s profit-pinched environment, that just won’t fly.