Near Disaster: Chase Ultimate Rewards And Flying Blue

I needed to take a last-minute business trip to Kiev. Cash fares were hovering over $900 one way for one-stop itineraries, so I started looking for opportunities to use points. When I book my own award travel, I optimize for the most efficient use of points and the stand-out value was 25,000 Ultimate Rewards points for an Air France flight. There was a long layover in Paris, but I really like Paris so the 9 hour layover was fine. It’s enough time to visit the Louvre and enjoy a coffee in a sidewalk cafe.

air france economy class seat

Unlike most airlines, Air France touts their economy class cabin. We’ll see if it lives up to the hype!

Unfortunately, the Flying Blue program is an absolute disaster right now. Air France/KLM just switched the chart from a fixed value redemption chart to variable redemptions (which, based on my analysis, is one of the biggest airline devaluations in history–most awards are up a minimum 30% and some are up 500%). It was a total fluke that the flight I wanted still cost 25,000 points, yielding 3.2 cents per point in value all-in (net of taxes/fees I had to pay out of pocket). This is very good redemption value on a ticket for which I would have paid real money. However, the devaluation comes on top of another negative change, removing the award calendar, which has driven call center volumes through the roof (because the only way to search for availability over a range of dates is to call now). Because of this, it can now take 2 hours to get through to an Air France representative.

Of course, my worst nightmare happened. Rather than posting immediately, after I transferred my Chase points, the points didn’t show up. I called Chase, who said that they transferred the points and it was Flying Blue’s fault. I called Flying Blue, and they said they hadn’t received the points so it was Chase’s fault. Both suggested I just wait. So I waited, and waited, and waited. I called to put the seats on hold so they wouldn’t disappear while I was waiting. Eventually I gave up and went to bed.

The following morning, the points still weren’t there. 4 hours before the flight, they still weren’t, so I called Flying Blue again. Fortunately, the friendly representative in the Mexico-based call center had a solution: “We are aware of this issue so we will advance you the points and your account will have a negative balance. When the points post from Chase, your balance will go back to zero.” She put me on hold, then came back a few minutes later to collect my credit card number. And just like that, I had a ticket to Kiev! I didn’t really believe that I did until I went to check in, and the computer spat out boarding passes.

So, certainly a stressful beginning to a trip, but a happy ending. I have no status with Flying Blue. I have never booked a ticket in their program. They don’t know I write this blog. They just thought on their feet and solved the problem by taking a risk (I could have been lying about transferring the points). And so instead of stranding me, which is totally what I expected, I’m now on the way to Kiev.

Summary

Chase is now reading a new telephone script when you call: “It can take from 1-7 days for your points to post after they are transferred.” After slowing down transfers to Korean Air and now Flying Blue, it appears Chase is trying to make Ultimate Rewards less valuable by making it impossible to redeem them for last-minute flights. This doesn’t appear to be a technical glitch; based on the policy change being communicated by their telephone agents, it seems to be deliberate. Also, there is nothing in writing on Chase’s Web sites to communicate the change, so people are going into this process with no idea that points transfers are no longer instantaneous.

Generally speaking, I like the Chase Ultimate Rewards program better than American Express Membership Rewards. However, the ability to have immediate use of transferred points is key. Award travel inventory is dynamic (a seat that is available now likely won’t be in a couple of days, particularly to a popular destination) and most of the value in keeping your points with a bank program instead of an airline program comes from the immediate ability to transfer and redeem points. There are fewer reasons to collect bank points instead of airline points if you aren’t able to easily redeem them for awards.

Airline points programs are rapidly losing credibility so it would be bad for consumers if banks to go the same direction and make points harder to redeem.

Understanding Loyalty Fraud In 2018

Loyalty fraud is a massive problem in the airline industry. It is estimated to cause billions of dollars in losses annually. Most of these losses used to only be “on paper” representing lost revenue; since airlines give away the seats they don’t think they’ll sell, a fraudulent redemption really only cost them a few dollars in overhead and catering. So, in the event that someone’s account was compromised and the points used, the airline would just restore the points and change the password (and optionally try to go after the fraudulent passenger, although this was usually more trouble than it was worth).

I’m sure this guy’s ID was legit. (Photo credit 419eater.com)

These days, it’s a much bigger deal when your miles and points get stolen because they can be redeemed for things other than airline tickets–items such as gift cards and online shopping purchases that cost the airlines real money. Naturally, given the increased risk exposure most airlines have implemented loyalty fraud programs. These look for unusual patterns in accounts and flag suspicious activity. Unfortunately, a lot of legitimate activity can look fraudulent, particularly when the algorithms aren’t updated along with changes in the way that people earn and redeem points.

I have helped people in a number of instances lately in which a frequent flier member’s account was flagged for fraud. Fortunately no tickets were outright cancelled but additional verification and security procedures had to be followed, up to even going to the airport on the day of travel with the credit card used to pay the taxes on an award ticket. However, this is happening less frequently lately and there are some identifiable patterns I will share to help you avoid being caught up by a fraud algorithm.

Now, if you’re here because you got involved with mileage brokers in the buying and selling of points and you just got caught, none of this will help you. That’s something you actually did, and if the airline is talking to you at all, you can assume they have you dead to rights. This post will only help you avoid being flagged if you’re actually innocent.

Fewer False Alarms

One thing that used to be incredibly suspicious in award programs was suddenly earning a large number of points, and then using them immediately for an expensive award redemption. And at one point, this made sense. Back when people earned most of their miles from flying, there was an upper limit to how much flying a person could reasonably do.

These days, this is a completely normal pattern. Many people have started earning points in transferable programs such as those operated by American Express, Chase, and Citi. So, they’ll earn the number of miles needed for a ticket, check for award availability across a number of different airline programs, and then transfer the miles to the program for redemption. And on the part of consumers, this is perfectly rational; airlines have devalued their own loyalty programs so much and so often that it’s better for most people to keep their options open.

The good news is that the horror stories of previous years, in which tickets were cancelled without notice or people were forced to drive to the airport to get award tickets issued, appear to have gone by the wayside in most of the programs that work with bank loyalty programs–provided that your redemption meets the new definition of “normal.” The biggest offender was Flying Blue but this wasn’t the only program that created difficulties.

Understanding Fraud Algorithms

If you book a normal award redemption these days, it’s unlikely to cause you any issues regardless of the loyalty program you’re using (with the possible exception of programs that are new to working with bank loyalty programs; these include Turkish Miles and Smiles and Avianca LifeMiles).

What’s a normal award redemption? It’s one that doesn’t trip the algorithm. To understand this, you just need to think like a computer. Algorithms like these are designed to either add or subtract points on a transaction depending on criteria that raise suspicion. So, for example, suppose that you start with 100 points, and the threshold is 50 points or below. An algorithm might work like this:

Subtract points (less suspicious):

  • You earned the points through flying or partners, or you transferred them in from your own credit card.
  • You are traveling on the itinerary (you won’t get flagged because you bought a ticket for your significant other, as long as you’re both traveling together).
  • The person traveling is someone for whom you have previously purchased a revenue ticket.
  • The person traveling is an immediate relative.
  • The person traveling has an established frequent flier account with the airline and a significant points balance.
  • You’re paying for the taxes with your own personal credit card.
  • You are traveling 3 or more days in the future.
  • The person traveling is going to a low fraud risk destination (such as Canada).


Add points (more suspicious):

  • The points you are redeeming were recently purchased with a credit card.
  • You aren’t traveling on the itinerary.
  • The person traveling is someone with whom you have no obvious relationship.
  • You’re paying for the taxes with someone else’s credit card. Bonus points if it’s a foreign credit card and you have never used one of those before, and even more bonus points if it isn’t a card associated with the person traveling.
  • The ticket is for an immediate departure. Right now, today.
  • The passenger is traveling to a high fraud risk destination (such as Nigeria).

 

How many points are assigned for what specific criteria? And are these the only criteria used? Well, that’s proprietary, and (for very good reasons) loyalty programs aren’t going to tell you. Some programs are more relaxed and others (such as Flying Blue) are less so. Nevertheless, when you look at the criteria that adds points, it’s pretty obvious why it is there.

detectiveManual Review

Keep in mind that one or two things that add points probably won’t trip you up as long as there are enough things that subtract points. After all, this stuff can totally reflect normal life. Your best friend just rage quit her job and you’re buying her a ticket to Costa Rica right now. With the points you coincidentally bought yesterday because there was an incredible mileage sale. You’ll join her this weekend but plan to fly another airline. And you’re using up the crappy gift card you got this Christmas to pay the taxes before the thing starts charging you fees. I mean, nothing about that scenario is suspicious once someone has a conversation with you, but it totally looks suspicious otherwise.

Loyalty programs that over-rely on dumb algorithms will just automatically cancel a ticket, or it won’t go through in the first place. That’s why many loyalty programs implement manual review for suspicious transactions. Most commonly, a transaction that is too suspicious can’t be completed online and the member will be instructed to call the loyalty program. At this point, extensive validation is done when the ticket is being purchased.

There can also be a “soft review.” When this happens, the loyalty program will call the member at the telephone number on file to inquire about the transaction. Of course, if the member doesn’t recognize the transaction, they’ll immediately unwind it. And sometimes, additional validation is required. Most commonly, the airline will require that the credit card used to pay the taxes be presented at the airport (this is becoming a requirement even for transactions that aren’t suspicious, and some programs go even farther by requiring that the loyalty program member’s credit card always be used). The airline may also interview the traveler to determine the legitimacy of their relationship to the loyalty program member.

Wrap-Up

Every verification that I have needed to do in order to satisfy a loyalty fraud investigation was necessary because the activity objectively looked shady: 

  • An intra-Africa flight from Nigeria booked on short notice using an organization’s credit card, using the loyalty account of a member who had never been to Africa (this pattern matches either fraud or a church mission–it was the latter).
  • A last-minute one-way ticket to Nicaragua for a foreign national who wasn’t related, taxes paid with cash equivalent (his new girlfriend had to attend a funeral, and the taxes were paid with a gift card).
  • A business class trip to Asia for an apparently unrelated person on a top-tier carrier leaving the following day with points that were just purchased (his cousin’s employer reimbursed the economy class fare, and the member purchased miles to buy her a business class flight for the same amount of money).

 

In every case, the passenger was able to travel. It did take a little bit of extra work to explain to the airline what was going on, and in the case of the ticket from Nigeria, the airline wanted to see the physical credit card (emailing in a photo of both sides was fine). However, in every case the airline was satisfied with the explanation. No loyalty accounts were frozen, and no tickets were cancelled. The system worked.

Don’t avoid loyalty programs because of potential security problems. If you’re doing something that looks suspicious to, say, Flying Blue, it’s virtually guaranteed to also look suspicious to Mileage Plus. Airlines may react differently and have different tolerance thresholds for suspicious activity, but they’re getting a lot better at this stuff and false alarms are a lot less common these days.