United Airlines Hit With Proposed Class Action Over Frequent Flyer Rewards

A proposed class action lawsuit filed in New Jersey federal court is seeking compensation for what plaintiffs say is an unfair and misleading company policy. The case, launched by Robert Gordon and Melissa Chan, accuses United’s MileagePlus rewards program of using an algorithm that charges users who have more miles a higher price than those with less miles, rather than charging a flat rate for hotel fees, taxis, and other advertised MileagePlus perks.

Potential class members have also been misled into thinking the payment policy was uniform.

The proposed lawsuit names United’s parent company, United Continental Holdings, Inc. and claims that customers are misled into thinking that services are charged at fixed rates. In the plaintiff’s case, for example, a hotel stay in Tokyo was found to cost more depending on the account holder’s number of MileagePlus miles. The complaint also alleges that, at the time, the company admitted to the practice after plaintiffs questioned why two different prices were quoted. The suit has been brought under the state’s Consumer Fraud Act and the Truth-In-Consumer Contract, Warranty and Notice Act.

The suit also notes that United allows customers to make up the difference in cash if the number of miles they have is insufficient, at a cost of 3.5 cents per mile. As such the company’s alleged policy of using an algorithm means customers are left out of pocket through no fault of their own when the system adjusts costs to ensure further payment is required.

At the heart of the suit is the accusation that United does not inform customers that its MileagePlus services are charged using a moving system – a practice the suit claims is deceptive and fails to honor the terms of the program. While the company denies the allegations, the suit seeks to certify a class of all MileagePlus customers who have been denied the benefits of the program because of wrongfully represented prices. Potential class members have also been misled into thinking the payment policy was uniform, the suit says.