Moderators: richierich, ua900, PanAm_DC10, hOMSaR

 
washingtonflyer
Topic Author
Posts: 1731
Joined: Sun Sep 08, 2013 9:45 pm

AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 4:15 am

Many of you have heard that AA's corporate security department went nuclear on certain AAdvantage members who were using affiliated credit cards (Citibank) to earn milions of frequent flier miles and immediately cash in those miles for award tickets. A goodly number of AAdvantage accounts were closed and a huge number of miles were "clawed back". At appears that some of those affected members filed complaints against AA with the USDOT. Information concering one complaint has made its way into the public and AA clearly is on a public relations offensive. Its response to the DOT complaint is contained in the attached link.

https://paxex.aero/2020/07/american-air ... behaviors/`
 
32andBelow
Posts: 5704
Joined: Mon Sep 03, 2012 2:54 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 4:56 am

What did they do that was illegals?
 
HardeesBiscuit
Posts: 33
Joined: Tue Aug 27, 2019 1:46 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 6:09 am

32andBelow wrote:
What did they do that was illegals?


Not illegal, but violated the AA terms & conditions for their mileage program. They gamed the system to get more bonus miles (MILLIONS OF THEM) from multiple credit card sign-ups (sign up, spend, close after bonus, repeat) than they were allowed to have by AA. used loopholes, fake names, bought & sold codes, multiple accounts, multiple email addresses, multiple phone numbers...all fascinating stuff if you give it a read. One family of 3 had 45 credit cards in 2 years or something like that. They cashed in for first class to Hawaii and got busted by AA, and actually complained that AA "stole their miles" or some BS. LOL. Hard not to feel a little bit of schadenfreude for the scammers.

The amount of intel that AA had on the 3 people in the complaint and what AA said in their reply was EMBARRASSINGLY making an example of the perps. Seems like AA is making an example out of them? At any rate, it's obvious AA can connect the dots among people doing such things to exploit their system.
 
32andBelow
Posts: 5704
Joined: Mon Sep 03, 2012 2:54 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 6:19 am

HardeesBiscuit wrote:
32andBelow wrote:
What did they do that was illegals?


Not illegal, but violated the AA terms & conditions for their mileage program. They gamed the system to get more bonus miles (MILLIONS OF THEM) from multiple credit card sign-ups (sign up, spend, close after bonus, repeat) than they were allowed to have by AA. used loopholes, fake names, bought & sold codes, multiple accounts, multiple email addresses, multiple phone numbers...all fascinating stuff if you give it a read. One family of 3 had 45 credit cards in 2 years or something like that. They cashed in for first class to Hawaii and got busted by AA, and actually complained that AA "stole their miles" or some BS. LOL. Hard not to feel a little bit of schadenfreude for the scammers.

The amount of intel that AA had on the 3 people in the complaint and what AA said in their reply was EMBARRASSINGLY making an example of the perps. Seems like AA is making an example out of them? At any rate, it's obvious AA can connect the dots among people doing such things to exploit their system.

How can you open a credit card with a fake name? You’d need a stolen identity to go with it.
 
User avatar
moo
Posts: 5116
Joined: Sun May 13, 2007 2:27 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:03 am

32andBelow wrote:
HardeesBiscuit wrote:
32andBelow wrote:
What did they do that was illegals?


Not illegal, but violated the AA terms & conditions for their mileage program. They gamed the system to get more bonus miles (MILLIONS OF THEM) from multiple credit card sign-ups (sign up, spend, close after bonus, repeat) than they were allowed to have by AA. used loopholes, fake names, bought & sold codes, multiple accounts, multiple email addresses, multiple phone numbers...all fascinating stuff if you give it a read. One family of 3 had 45 credit cards in 2 years or something like that. They cashed in for first class to Hawaii and got busted by AA, and actually complained that AA "stole their miles" or some BS. LOL. Hard not to feel a little bit of schadenfreude for the scammers.

The amount of intel that AA had on the 3 people in the complaint and what AA said in their reply was EMBARRASSINGLY making an example of the perps. Seems like AA is making an example out of them? At any rate, it's obvious AA can connect the dots among people doing such things to exploit their system.

How can you open a credit card with a fake name? You’d need a stolen identity to go with it.


It looks like family members details were used, which would be readily available. This definitely looks like fraud to me.
 
birdup
Posts: 34
Joined: Sat Apr 20, 2019 2:08 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:10 am

32andBelow wrote:
How can you open a credit card with a fake name? You’d need a stolen identity to go with it.


The credit cards were opened with the real names. AAdvantage accounts are what were opened with fake names, for the sole purpose of getting credit card offer mailers sent to each fake AAdvantage member. The mailed credit card offers could be used for anyone (loophole), not just the (fake) person they were sent to, and because these particular offers didn’t have limitations on multiple bonuses, you could get yourself a new AA Citi card every couple months or so as long as you kept getting mailers sent to your dog/cat/houseplant etc.

This literally went on for years and instructions for this were all over the Internet, so it really speaks to AA and Citi’s bad IT or lack of concern until recently that this lasted so long. AA certainly made quite a bit of money from selling these miles to Citi, and then being able to prevent the miles from being used.
 
32andBelow
Posts: 5704
Joined: Mon Sep 03, 2012 2:54 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:11 am

birdup wrote:
32andBelow wrote:
How can you open a credit card with a fake name? You’d need a stolen identity to go with it.


The credit cards were opened with the real names. AAdvantage accounts are what were opened with fake names, for the sole purpose of getting credit card offer mailers sent to each fake AAdvantage member. The mailed credit card offers could be used for anyone (loophole), not just the (fake) person they were sent to, and because these particular offers didn’t have limitations on multiple bonuses, you could get yourself a new AA Citi card every couple months or so as long as you kept getting mailers sent to your dog/cat/houseplant etc.

This literally went on for years and instructions for this were all over the Internet, so it really speaks to AA and Citi’s bad IT or lack of concern until recently that this lasted so long. AA certainly made quite a bit of money from selling these miles to Citi, and then being able to prevent the miles from being used.

I thought the mikes were bought by the bank. Wouldn’t this be on the bank for approving all these cards?
 
birdup
Posts: 34
Joined: Sat Apr 20, 2019 2:08 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:18 am

Citi probably shouldn’t have approved the cards/sign-up-bonuses, but arguably Citi was just following AA’s loophole-ridden rules, and it was easier for AA to ban a bunch of AAdvantage accounts when the users had violated their rules by signing up for too many Citi cards. AA’s relationship with the banks is pretty valuable considering they wouldn’t have been profitable without the banks buying their miles, so working with Citi to close the loopholes was probably more prudent than going after Citi for having bad IT.
 
Jomar777
Posts: 628
Joined: Tue Oct 20, 2015 8:45 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:27 am

birdup wrote:
32andBelow wrote:
How can you open a credit card with a fake name? You’d need a stolen identity to go with it.


The credit cards were opened with the real names. AAdvantage accounts are what were opened with fake names, for the sole purpose of getting credit card offer mailers sent to each fake AAdvantage member. The mailed credit card offers could be used for anyone (loophole), not just the (fake) person they were sent to, and because these particular offers didn’t have limitations on multiple bonuses, you could get yourself a new AA Citi card every couple months or so as long as you kept getting mailers sent to your dog/cat/houseplant etc.

This literally went on for years and instructions for this were all over the Internet, so it really speaks to AA and Citi’s bad IT or lack of concern until recently that this lasted so long. AA certainly made quite a bit of money from selling these miles to Citi, and then being able to prevent the miles from being used.


I see what you say but... I am very concerned that CITI allowed someone to have loads of cards from them. Their Fraud Team should have become deaf from the several alarm bells ringing on their ears. The mileage thing I perfectly get it since, given it is only an award of some sort, the security is lax (should not be...). But for a bank to feel comfortable to issue multiple credit cards to someone... ???). You might say "But they get it, used it, pay the bill, get bonus, cancel it". This is still an issue because your bank history will (should) keep still information that you in fact did have a card before so, let's say, after a pattern of two, you would be stuffed. Unless the pattern extends for two/three years for example...

I have one of these (AMEX linked with British Airways). If I cancel mine and try to get one new (to get the initial award miles they give...), BA might not even know it simply because AMEX Europe would block me on spot on the grounds that they already have a card linked to my ID on their files (even though it might be cancelled). Regardless of my financial circumstances, I would not be able to apply for it for at least 2 years.
 
afcjets
Posts: 3832
Joined: Thu Jan 01, 2015 6:20 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 1:21 pm

Why would Citibank care? (Unless they're paying AA for the bonus miles). If you close an account you have a zero balance and if you reopen and repeat this pattern as many times as you want, your debt to income ratio and percent of total credit used is unaffected and there is zero financial risk to Citibank by allowing this.
 
User avatar
casinterest
Posts: 13952
Joined: Sat Feb 12, 2005 5:30 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 1:53 pm

afcjets wrote:
Why would Citibank care? (Unless they're paying AA for the bonus miles). If you close an account you have a zero balance and if you reopen and repeat this pattern as many times as you want, your debt to income ratio and percent of total credit used is unaffected and there is zero financial risk to Citibank by allowing this.


Citibank should have cared about the multiple openings and possible fraudulent setups, but as you say, they weren't the one losing anything, It was AA. However perhaps AA should look at another bank to provide their cards if their partner is gaming the system at the loss of AA.
 
rfields5421
Posts: 6374
Joined: Thu Jul 19, 2007 12:45 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 2:29 pm

Jomar777 wrote:
I am very concerned that CITI allowed someone to have loads of cards from them. Their Fraud Team should have become deaf from the several alarm bells ringing on their ears. The mileage thing I perfectly get it since, given it is only an award of some sort, the security is lax (should not be...). But for a bank to feel comfortable to issue multiple credit cards to someone... ???). You might say "But they get it, used it, pay the bill, get bonus, cancel it". This is still an issue because your bank history will (should) keep still information that you in fact did have a card before so, let's say, after a pattern of two, you would be stuffed. Unless the pattern extends for two/three years for example...

I have one of these (AMEX linked with British Airways). If I cancel mine and try to get one new (to get the initial award miles they give...), BA might not even know it simply because AMEX Europe would block me on spot on the grounds that they already have a card linked to my ID on their files (even though it might be cancelled). Regardless of my financial circumstances, I would not be able to apply for it for at least 2 years.


Maybe in Europe. Cancel a card from someone like CITI in the US, and a week later you get offers from them to 'come back' and enhanced sign-up bonuses. It would be easy for a person to go through four or five cards a year, and 'earn' four or five sets of bonuses.
 
umichman
Posts: 277
Joined: Sun Apr 07, 2019 2:42 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 3:10 pm

afcjets wrote:
Why would Citibank care? (Unless they're paying AA for the bonus miles). If you close an account you have a zero balance and if you reopen and repeat this pattern as many times as you want, your debt to income ratio and percent of total credit used is unaffected and there is zero financial risk to Citibank by allowing this.


It's almost certainly the case that Citibank is paying AA for those sign-up bonus miles. Why would AA give them to Citi for free? That's why these credit card affinity relationships are so valuable to the airlines. A number of them are now considering pre-selling miles (at a discounted rate to make it attractive to the credit card companies) in order to raise extra capital. So it is clear there is an actual accounting for the miles being provided to Citibank and these are not some lump payment arrangements where the airlines don't account for the miles they ultimately end up having to issue. It would be fiscally irresponsible to not account for them as they are a liability they report on their financial statements.
 
User avatar
DocLightning
Posts: 22259
Joined: Wed Nov 16, 2005 8:51 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 5:24 pm

HardeesBiscuit wrote:
One family of 3 had 45 credit cards in 2 years or something like that.


Wouldn't that tank your credit rating?
 
anrec80
Posts: 2759
Joined: Mon Jan 10, 2011 7:50 am

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 7:38 pm

rfields5421 wrote:
Maybe in Europe. Cancel a card from someone like CITI in the US, and a week later you get offers from them to 'come back' and enhanced sign-up bonuses. It would be easy for a person to go through four or five cards a year, and 'earn' four or five sets of bonuses.


Nope. With Citi, you can get a new sign-up bonus only after 2 years since you have either opened or closed a ThankYou credit card.
 
luckyone
Posts: 4046
Joined: Thu Aug 21, 2008 1:50 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Wed Jul 08, 2020 10:49 pm

DocLightning wrote:
HardeesBiscuit wrote:
One family of 3 had 45 credit cards in 2 years or something like that.


Wouldn't that tank your credit rating?

That's what I always thought. I have a casual friend who extols the virtues of credit cards for their rewards and bragged about getting at least his 30th credit card. As one of my parents regularly abused credit cards when I was young this gave me a panic attack at what this guy's credit must look like.
 
alfa164
Posts: 3984
Joined: Sat Oct 06, 2012 2:47 am

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 2:55 am

luckyone wrote:
DocLightning wrote:
HardeesBiscuit wrote:
One family of 3 had 45 credit cards in 2 years or something like that.

Wouldn't that tank your credit rating?

That's what I always thought. I have a casual friend who extols the virtues of credit cards for their rewards and bragged about getting at least his 30th credit card. As one of my parents regularly abused credit cards when I was young this gave me a panic attack at what this guy's credit must look like.


If I recall correctly, a credit inquiry costs the applicant about 6 points on the FICA score. For someone with a 750+ score, it should have minimal effect on creditworthiness.
 
Jomar777
Posts: 628
Joined: Tue Oct 20, 2015 8:45 am

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 7:03 am

rfields5421 wrote:
Jomar777 wrote:
I am very concerned that CITI allowed someone to have loads of cards from them. Their Fraud Team should have become deaf from the several alarm bells ringing on their ears. The mileage thing I perfectly get it since, given it is only an award of some sort, the security is lax (should not be...). But for a bank to feel comfortable to issue multiple credit cards to someone... ???). You might say "But they get it, used it, pay the bill, get bonus, cancel it". This is still an issue because your bank history will (should) keep still information that you in fact did have a card before so, let's say, after a pattern of two, you would be stuffed. Unless the pattern extends for two/three years for example...

I have one of these (AMEX linked with British Airways). If I cancel mine and try to get one new (to get the initial award miles they give...), BA might not even know it simply because AMEX Europe would block me on spot on the grounds that they already have a card linked to my ID on their files (even though it might be cancelled). Regardless of my financial circumstances, I would not be able to apply for it for at least 2 years.


Maybe in Europe. Cancel a card from someone like CITI in the US, and a week later you get offers from them to 'come back' and enhanced sign-up bonuses. It would be easy for a person to go through four or five cards a year, and 'earn' four or five sets of bonuses.


Thanks for the information. I did not know that!! In the UK (at the very least... I believe that this a procedure most... if not all... EU Banks follow) you have to wait for quite a while to re-apply. This annoys a lot of customers because when Credit Cards/Banks release new offers for new customers only, you tend to go berserk. But I see that there's the caveat that this floating is not possible.
 
luckyone
Posts: 4046
Joined: Thu Aug 21, 2008 1:50 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 2:41 pm

alfa164 wrote:
luckyone wrote:
DocLightning wrote:
Wouldn't that tank your credit rating?

That's what I always thought. I have a casual friend who extols the virtues of credit cards for their rewards and bragged about getting at least his 30th credit card. As one of my parents regularly abused credit cards when I was young this gave me a panic attack at what this guy's credit must look like.


If I recall correctly, a credit inquiry costs the applicant about 6 points on the FICA score. For someone with a 750+ score, it should have minimal effect on creditworthiness.

Well, using my example that’s up to 30 x 6 = 180. Sounds more than minimal to me.
 
anrec80
Posts: 2759
Joined: Mon Jan 10, 2011 7:50 am

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 2:46 pm

luckyone wrote:
Well, using my example that’s up to 30 x 6 = 180. Sounds more than minimal to me.


Generally, all inquiries and hard pulls made within 30 days, count as one.
 
dfwjim1
Posts: 2592
Joined: Fri Sep 09, 2011 8:46 pm

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 5:39 pm

DocLightning wrote:
HardeesBiscuit wrote:
One family of 3 had 45 credit cards in 2 years or something like that.


Wouldn't that tank your credit rating?


There are people out there (including myself) who could less about their credit rating. I am not going to be opening multiple credit cards plus I am not planning on borrowing money and/or seeking a new job.
 
alfa164
Posts: 3984
Joined: Sat Oct 06, 2012 2:47 am

Re: AA goes after credit card churners in DOT complaint proceeding

Thu Jul 09, 2020 5:42 pm

luckyone wrote:
alfa164 wrote:
If I recall correctly, a credit inquiry costs the applicant about 6 points on the FICA score. For someone with a 750+ score, it should have minimal effect on creditworthiness.

Well, using my example that’s up to 30 x 6 = 180. Sounds more than minimal to me.


Over what period of time did he acquire those 30 cards? The "points" deduction only lasts for one year from the inquiry; it is unlikely he would have applied for all his cards within such a short period of time.

And despite what another person wrote, multiple credit card inquiries will appear on your report within the same month. Generally, credit scores won't be affected by multiple inquiries from mortgage, auto leases or loans, or student loans within a short period of time; they are treated as a single inquiry and will have little impact on credit scores. Multiple credit card and personal loan inquiries may point to you being a higher risk, and will create demerits on your report.

Who is online

Users browsing this forum: dc10bhx, speedygonzales and 22 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos