Sign on the Dotted Line…

Michael Sommer, a technology consultant, found out the hard way about one-way fine print contracts as he checked in recently for a flight to Buenos Aires. A United Arlines supervisor at the gate handed him a letter that decreed the confiscation of his 2 million frequent flier miles, dozens of flight coupons and his elite status. United Airlines had audited his account, discovering violations of passenger program rules, which he denied so doing.

Now, regardless of the violations alleged — such as misusing denied boarding certificates, is this unilateral wipeout the way to treat a loyal customer racking up over 2 million frequent miles? Especially when United Airlines is in bankruptcy and presumably wanting to make friends and influence people to use its services!

Mr. Sommer’s case led The New York Times to further inquiries which resulted in finding that some other airlines are conducting these tougher “audits” of their most loyal customers and making decisions from special software that looks for suspicious patterns. These include, the Times reports, “claiming miles for a nonrevenue ticket or using the wrong frequent-flier number when requesting mileage credit.”

The procedures are autocratic. Paul Dingham, an economic consultant, found out about his audit only after US Airways slammed down the gavel on him. “The airline didn’t inform me in advance of the audit, nor did they offer me an opportunity to appeal,” he complained.

What these seasoned travelers discover is the fine print on most of these frequent flier programs declare that the miles to be owned by the airline and they can be diluted, deadlined or removed by the unbridled judgment of the carrier.

Mr. Sommer may contest this assertion by United Airlines in court. Thus far, the courts have not been congenial to passengers when the airlines dilute the frequent flier program by requiring, for example, more miles, already earned, for a round trip.

American consumers are fast losing their contractual rights in the service area of the economy. Fine print contracts, such as credit card agreements, brokerage agreements and insurance policy contracts, are very one-sided and getting worse each year. Have you ever read the shrink-wrap license agreement after you buy software?

More and more of these standard/form take-it-or-leave-it contracts contain binding arbitration clauses that prevent you from suing vendors to resolve a dispute. They even contain the ultimate mockery of the meaning of the word “contract” as a mutually binding agreement. The large companies increasingly stipulate in microscopic print that they reserve the unilateral right to change the terms of their sales agreement.

Well, you may say, you don’t have to sign on the dotted line and can look for another competitor to patronize. Sure, but the competitor has the same fine print contract, whether General Motors or Ford, State Farm or Allstate, Citigroup or Bank of America.

These big company standardized contracts regulate your relationship with the company. That fine print is enforceable in most courts. Judges rarely invalidate these provisions anymore under the doctrine of unconscionability. These giant corporations have become their own private legislatures. Perhaps someday anti-trust doctrine can be invoked if there is evidence of collusion by sellers to suppress competition in pre-printed contractual offerings.

Meanwhile, the dotted line moves on to fiat after fiat, as in the recent proliferation of wholly unregulated stored value cards offered to millions of desperate “unbanked” consumers. The control of peoples’ money by the financial industry not only gouges with sky-high interest rates and penalties. It also ranks your credit rating, and credit score in ways that deter your ability to complain and assigns you a number that determines where, how, when and whether you can or cannot buy.

Congress and the state legislatures are way behind the curve in protecting consumers here. It is time for citizens to start giving these lawmakers a scorecard for being absent without leave of the voters, thereby leaving them defenseless before these modern day Mammons.