American Airlines caught lying to passengers, repeatedly — DOT fine paltry

by Charlie Leocha on December 19, 2013


The Department of Transportation (DOT) after investigating a consumers formal complaint found that American Airlines (AA) was lying to consumers by stating that fuel surcharges were “taxes.” The complaint, filed by Benjamin Edelman, included numerous transcripts and recordings of AA representatives repeatedly misrepresenting (lying) carrier-imposed surcharges as “taxes” during the booking process for multiple airline tickets made on various dates. After admitting that their representatives had lied, and promising to retrain their agents, AA was fined $60,000.

In the words of the DOT:

This order finds that American violated 14 CFR 399.84(a) and committed unfair and deceptive trade practices in violation of 49 U.S.C. § 41712 by misrepresenting carrier-imposed surcharges as “taxes.” In addition, the order directs American to cease and desist from further similar violations of the cited statute and rule, assesses a compromise civil penalty of $60,000, and dismisses the complaint filed in this docket.

AA’s lying about airline surcharges went beyond improperly trained telephone agents. The practice of misrepresentation was continued on the AA website, where sales receipts generated for flights also listed carrier surcharges under the heading of “taxes.”

The Complainant further alleges that for flights booked in 2011, American’s e-ticket receipts listed all taxes and carrier-imposed surcharges under the single heading of “taxes.”

According to Edward Hasbrouck, who together with the Consumer Travel Alliance has been following this complaint through DOT, notes, “Charges are not taxes. They are imposed and retained by airlines, not mandated by, or passed on to, any government. They should properly be described as part of the ‘fare.’”

Though AA’s actions have evidently been continuing for some time, the complaint began with a letter from Edelman to the DOT in January of last year.

Eventually, in a formal complaint, Edelman urged DOT to open an investigation regarding these matters; to order American to refund to ticket purchasers all monies represented to ticket purchasers as “taxes” or government‐imposed fees, but not actually remitted to governments; to impose civil penalties; to refer the matter to appropriate tax collection agencies; and to issue any necessary revised guidance or regulations to clarify that the practices described above are unfair and deceptive.

Unfortunately, though DOT found AA guilty of repeatedly lying about taxes and fees, they did not move to have the airline reimburse monies that had been improperly identified to consumers who had been flimflammed. After alleging that AA had lied and after AA admitted that they lied over an unknown period of time, DOT let the airline off virtually with a minimal slap on the wrist. Rather than sending a message that airlines should tell truth to consumers, DOT has underscored that their concerns about truth in advertising is minimal, at best.

The complaint is eye-opening. These are taken word-for-word from DOT’s finding.

• American acknowledges that its agents continued to describe taxes and carrier-imposed surcharges collectively as “taxes” during telephone bookings. American describes these acts as inadvertent mistakes.
• American acknowledges that the pop-up displays provided by Mr. Edelman did not clearly distinguish between taxes and carrier-imposed surcharges, as required by the February 2012 guidance.
• American acknowledges that the reservation document that was generated in the Complainant’s transaction of April 3, 2013, was inaccurate.
• American acknowledges that its agents may have unintentionally referred to carrier-imposed surcharges as “taxes.”
• American acknowledges that as late as October 2013, certain pop-ups and links on its site placed carrier-imposed fees under the heading of “taxes and fees,” in violation of the February 2012 guidance.
• American representatives repeatedly made such misstatements after April 21, 2012.
• American contends that it had no intent to deceive …

Here is another way to put the responses of AA — We lied repeatedly, verbally and in writing, but we didn’t mean to.

Actual formal complaints submitted to DOT each year can be counted on one hand. When one is submitted with overwhelming substantiating evidence and when the airline admits that it has been lying to passengers verbally and in writing, penalties should be severe rather than less money than the airline spends on a single conference call with a group of lawyers and lobbyists. Airlines seem to need to feel significant financial pain before they change their anti-passenger actions.

This consent order was immediately checked by Mr. Edelman and the assertion that the airlines have ceased and desisted from similar violations. His examination found that AA was still continuing to mislead consumers by lying to them during the ticket purchasing process. A new complaint has been filed with a listing of instances where AA was still misrepresenting airline-imposed surcharges as taxes.

Edelman cites three instances where during calls on December 11 and 12, AA lied to their customers. This time, the investigations should not take as long to investigate as the previous complaint, and punishment should be significant. These issues show AA stating unambiguous falsehoods that have been, “…entirely automated and cannot be attributed to agent error.”

The government has decided that competition is not important in the aviation industry through their recent actions approving the AA/US Airways merger. I hope that they do not signal the remaining carriers that telling the truth is also unimportant by allowing AA to flaunt the latest DOT Consent Order.

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