A bill introduced by Sen. Dick Durbin (D-Ill.) would require airlines to provide one year's notice before reducing the value of points in their loyalty programs, plus several other restrictions.
The Protect Your Points Act also would bar airlines from including language in theirs terms of service for loyalty programs and co-branded credit cards that allow them to make valuation changes without notice.
In addition, it would require airlines to display the monetary value of their points on every page of their website. It would prohibit points from expiring. It would require airlines to allow an unlimited number of points to be transferred to another member of its loyalty program free of charge. It would require airlines to display ticket costs in dollars and points on the same screen, so that prices can be easily compared. And it would require airlines to allow tickets and ancillaries to be purchased in any combination of dollars and points.
The bill's introduction could further ramp up pressure on airlines, which rely on loyalty programs as a crucial source of high-margin revenue. The U.S. Transportation Department recently began a probe into the loyalty programs of American, Delta, Southwest and United to determine if they are administered in an unfair or deceptive manner.
Durbin's bill is the second he has introduced that could impact airline loyalty programs. Last year, he introduced the Credit Card Competition Act, with the goal of reducing the swipe fees merchants pay to accept credit card purchases. Critics argue the bill would be harmful to loyalty programs since banks use a portion of swipe fees to buy the airline points that they then award to holders of co-branded credit cards as a signup bonus and for purchases.
In a statement, Airlines for America defended the industry's practices and took aim at Durbin's latest bill. "U.S. airlines are transparent about these programs, and policymakers should recognize their popularity and work to ensure that unnecessary regulation doesn't eliminate them," the airline trade group said.
Durbin, the Senate's second-ranking Democrat, said, "My bill only requires the airlines to play fair. If these programs are as valuable to consumers as the airlines claim they are, the airlines should have no trouble taking these simple steps to make them more transparent."