Should frequent-flier programs be regulated?

New York Senator Chuck Schumer’s latest campaign is a bit more lightweight than health care reform: airline frequent flier programs. On Sunday he urged the Department of Transportation to regulate the programs, saying that consumers often face quickly expiring miles, confusing terms, and little notification from airlines before miles vanish.
  
We've written about this trend of expiring frequent flier miles in the past. Just a few years ago you had three years to redeem miles. Now 12-24 months is the norm (Virgin Atlantic is still three years). Miles used to expire after Dec. 31 each year; now they may expire any time and you're unlikely to get a call from your airline warning you. (Tthere are some sites that will track your miles expiration dates and alert you 30 to 60 days before they expire. We haven't looked at them, but the Los Angeles Times has.) There's even an iPhone app, Mileblaster, that keeps track of your miles and sends alerts. 

Some airlines give you fewer miles depending on the type of ticket you buy. British Airways, for instance, now gives only 25 percent of the miles you'd receive with a standard ticket if you book a discounted, or non-changeable ticket.
  
This all may not seem like a big deal since miles programs are free. But if you stay loyal to an airline in hopes of cashing in rewards, you may miss out on cheaper airfares from competing airlines. And according to the Associated Press, Schumer believes that consumers actually pay for frequent flier programs through higher ticket prices and fees.
  
Randy Petersen, founder of flyertalk.com and editor of insideflyer.com, says miles expiration policies fall into three scenarios:
 
•  Passive expiration. Points expire after two years, but you can easily reset the two years through almost any activity: filling out an online survey, making small redemptions (like buying a magazine subscription) or making purchases through an airlines "mileage mall." In such "malls," purchasing a single, 99-cent song on iTunes might be enough to keep your miles current. Delta, United and American Airlines fall into this group.  You can even go to http://www.e-miles.com and watch a quick commercial to earn points and reset your points clock. AirTran, Continental, Delta, Frontier, and US Airways all participate in e-miles. Some airlines will even reinstate miles for a fee. This may be a bad deal, however Delta will reinstate all of your miles, no matter how old, for $50.  

Don't be victimized by fine-print thievery

“Free ring tones for your cell phone*” “Special prices on airline travel*” “Get full MSRP for your used car*”

You’ve likely seen or heard such offers in print and on TV, radio, and the Internet. They often come with lots of conditions, either in hard-to-read fine print or uttered by a fast-talking announcer.

While ads can use fine print or its verbal equivalent to elaborate on the details of an offer, major conditions and other gotchas should be made clearly and conspicuously. Companies that leave the devil for the details risk violating various federal and state laws. In judging an ad, regulators and courts look at whether the overall effect is likely to mislead customers acting reasonably under the circumstances and whether that deception materially affects the deal.

There are plenty of examples of companies’ failing that test.

• August 2009. The Federal Department of Transportation reached a consent order with United Airlines in connection with fares posted on the “special deals” section of airline’s Web site. The agency said the ads violated federal rules against unfair or deceptive practices because they used double asterisks and fine print to disclose that additional payments for taxes and fees were required, along with the purchase of round-trip travel. United must pay a must pay a $75,000 civil penalty.

• May 2008. The New York Attorney General announced settlements with four New York car dealers that advertised various offers, disclosing important details in “fine print or untenable disclaimers.” For example, one Suzuki dealer’s radio ad offered consumers a trade-in price of 100 percent of their vehicles’ manufacturer’s suggested retail price, but left it to a fast-spoken disclaimer to reveal that it would deduct 35 cents per mile on the odometer and, for cars more than a year old, impose an unspecified reconditioning charge. The dealers collectively were required to pay $32,500 in fines and clean up their act.

JetBlue's $599 cure for wanderlust

Go on, take the month off. JetBlue recently announced a $599 "All you can jet" pass that lets you travel as much as you want, anywhere JetBlue flies. You have from September 8 to October 8 to fly from the mountains to the valleys, from sea to shining sea, and every other cliché you can hum. You must sign up for the pass by August 21. JetBlue says it has the right to suspend the sale of the passes earlier than that, however, so hurry if you're interested. 

As our colleagues at The Consumerist note, however, it may not be the deal it looks like, considering that many JetBlue flights, all sold as one-way legs, are fairly inexpensive to begin with. For instance, at this posting the airline is offering one-way flights as low as $99 from Ft. Lauderdale to Long Beach, Calif. You'd need to fly three round trips in one month before you'd approach breaking even. 

Taxes and fees are included in the deal; additional taxes and fees only apply to Puerto Rico and international travel. But the rules state that Jet Blue will slap you with a $100 penalty, among other restrictions, if you fail to show up for a flight. 

For tips from Consumer Reports on last-minute travel deals, click here. 

Photo courtesy of Seamus Murray

Airplane air is still stale, but the summer deals are fresh

The Wall Street Journal today reported that airlines have yet to act on recommendations to improve airplane air quality, a year after those steps were proposed by an industry blue-ribbon panel. The recommendations, the Journal notes, included "voluntary standards for onboard air circulation, lower ozone exposure, new monitoring for contaminated air from oil or hydraulic fluid leaks, and limits on pesticides used on planes."

That news adds insult to injury in an environment in which summer travelers are experiencing ever-shrinking amenities and higher fees. Still, there are steps you can take to make your air travel healthier and more comfortable; click here for our advice from Consumer Reports Health.

And, if you can put up with that stale air and are willing to do a bit of legwork, you can save a bundle on air travel now. Check out our latest article on travel deals from the Consumer Reports August issue.

Best recession bargains now: Part 1

As cruel as it’s been, the current recession has also done many of us some good. We’ve found ways to spend less, pay down our debts, and save more. And many of the goods and services we may have put off purchasing are available at deeply discounted prices.

If your finances are in good shape, now could be the time to take advantage of these bargains. Below, and in three upcoming posts, the folks from Consumer Reports Money Adviser recommend a dozen products and services that are great buys now, along with strategies that will help you save the most. But before you shop, heed another lesson the recession has taught us: Charge only if you know you can pay the bill right away.

Televisions

If your old set needs replacing, now is a good time to do it. With sales down overall, prices are becoming even more competitive.

Use shopping bots. Internet bots compare prices for specific models from hundreds of retailers. You can sort listings by price, including tax and shipping, and you might be able to set alerts that will notify you when prices drop. Some bots to consider: BizRate (and its affiliate, Shopzilla), Google Product Search, MySimon, PriceGrabber, Shopping.com, and Yahoo Shopping.

Be a store detective. Do all you can to make sure you like the TV in the store. View the set from the same distance and angle you’ll be watching it from at home. If you decide to return it, you might have to pay a restocking fee of 15 percent or more.

Pass on an extended warranty. Our surveys show that flat screens have had a very low repair rate. And you can get extended coverage beyond the manufacturer’s plan free from some retailers (including Costco) or if you use credit cards.

Tips for the best 'staycation' ever

With unemployment a reality for so many Americans, and the fear of job loss a weighing heavily on the minds of many more, the idea of a pricey vacation is out of the question a lot of us.

Swine flu spawns unusual travel refund policies

Travelers booked for Mexico, the epicenter of the current swine flu outbreak, are getting some unusually lenient treatment from several airlines and tour operators: reduced or waived penalties for changes in travel plans. That seems to signal the seriousness of the epidemic in Mexico, as well as the poor health of the travel industry, which can ill afford to anger consumers as the recession wears on and traffic slumps.  

American, JetBlue, United and other big U.S. airlines will let travelers going to, from, or through Mexico change their destinations or travel dates without penalty or increased fares for the same type of discount ticket. At least two big tour package operators—MLP, which operates tours for Continental, Delta, and Northwest, and Apple Vacations—are allowing their customers do the same. Contact your airline or travel agent for specific limitations.

In general, that preserves the value of the travel that was purchased, but you won’t get a cash refund. Nevertheless, this is a big departure from standard cancellation policies. “The only other time I’ve seen blanket change policies like this has been during hurricane warnings,” says JoAnne Kochneff, a 20-year travel agent at Travel by Gagnon in Grand Rapids, Mich.

Most consumers buy non-refundable airline tickets. When you change or cancel those, you get a travel voucher for future travel on the same carrier, minus itinerary change penalties of $150 for domestic travel and $250 for international, plus you pay any higher fare on the new flight. With tour packages, you typically pay at least 30 days in advance and get zero refund if you cancel or want to change plans.

So far, cruise lines have not announced similar give. Travelers usually pay in full for a cruise 60 to 75 days in advance, and get no refund if they cancel or change plans. Today, however, when three Carnival Cruise ships failed to call on their scheduled Mexican ports, the cruise line gave passengers a mere $20 credit. A Carnival spokeswoman told us the company is working on a cancellation/change policy related to the recent Centers for Disease Control Travel Health Warning, which recommends the postponement of non-essential travel to Mexico. The Cruise Line International Association has not returned a call for comment.

Extraordinary circumstances aside, in most cases, your contract, not law or regulation, governs trip cancellations and changes, and there are few consumer protections, says Alexander Anolik, a San Francisco travel law attorney and author of Traveler’s Rights ($21.95, Morris Publishing). “A health warning from the government is only a warning and does not negate any contractual obligation you have,” says Anolik. Only a government action preventing you from travel to your destination provides sufficient force majeure to allow you to break your contractual obligation without penalty.

What can you do if that never happens and your travel provider doesn’t volunteer a more flexible cancellation/change policy for travel to Mexico or elsewhere in the future? Here are some strategies:

• Try to negotiate a break. If you’re a frequent traveler or affinity club member, remind customer service about the value of your business, which can be taken elsewhere.
• Book through a travel agent. Because they regularly bring volume business to the same companies, they can use their added clout on your behalf and often have access to special customer service people who can bend the rules.
• Don’t be tempted by trip cancellation insurance. Standard policies don’t protect against the present circumstances. ‘Termination-at-will’ policies might cover this situation, but they’re very expensive and difficult to get.—Jeff Blyskal

For  more on the swine flu outbreak, see the CR Health Blog.

New credit cards offer more cash back

Many credit card issuers have been taking a hatchet to their cash-back and rewards programs lately. But two financial-services companies are bucking the trend.

Both Fidelity Investments and Charles Schwab now offer cards with 2 percent rewards, no limits on how much you can earn, and no annual fees. No other cards that we know of give 2 percent back on all purchases. Most credit cards provide higher rewards for certain categories of spending, like gas or groceries, and lower ones for everything else. And often the higher rewards kick in only after you’ve crossed a certain spending threshold. For example, the AmEx Blue Cash card gives its highest level of rewards only after you’ve spent $6,500 in a year on the card.

Fidelity offers cards from American Express and Visa. Only the AmEx cards give 2 percent cash back on all purchases; with the Visa, it’s 1.5 percent on the first $15,000 in annual purchases and 2 percent after that. Schwab’s card is a Visa and has an additional benefit for frequent overseas travelers: no international exchange fees. Those fees often run from 1 to 3 percent, and aside from Capital One no other major credit issuer waives them.

Both the Fidelity and Schwab cards will deposit your cash back into a linked brokerage account. The Fidelity AmEx card can also be linked to a Fidelity 529 college savings plan or to an IRA.

While getting some extra cash back may be appealing these days, bear in mind that Fidelity’s cards carry an annual percentage rate of 17 percent, while the Schwab version has an APR of 14 percent. So they’re not for people who carry a balance. –Chris Fichera

Credit card rewards: Use them or lose them

If you’ve been stockpiling frequent flyer miles or other reward points earned with credit cards, better use them before you lose them.

That’s the word from Robert McKinley, who has been following the credit card industry for more than 20 years as founder of CardTrak.com, based in Naples, Fla. 

To offset losses due to consumers defaulting on their card debt, issuers are already jacking up interest rates and fees, not to mention cutting or freezing credit limits. Next, card companies are likely to trim their costs by reducing the value of rewards or even eliminating the programs entirely with little advance warning, according to McKinley.

“Rewards programs cut into profits, and issuers can make changes in them faster than they can with other card terms, so you may suddenly get a letter saying that you need more points for airline seats or that the rewards program is over, effective immediately,” McKinley says.

Another way you can lose reward points is by making late payments, which will also trigger penalty fees,  typically $39 these days. Penalty fees were one source of card company revenue that actually rose last year as the economy took a nosedive. According to industry consultant R.K. Hammer, card issuers' penalty fee income jumped to $19 billion in 2008, up 5 percent from the previous year. Penalty fees in 2009 are predicted to increase further, to a record $20.5 billion. 

So if you’re planning to take a trip to use up some reward miles, make sure you’ve got your credit card payment set on autopay or in the mail before you leave and don't inadvertently pay a price for cashing in those "free" miles. —Andrea Rock

JetBlue to the rescue

A few months ago we reported how automaker Hyundai was trying to boost sales in tough times by offering to buy back vehicles from customers who lost their jobs and couldn’t afford to make their monthly finance payments.

Now JetBlue, a major player in the beleaguered airline industry, has launched a similar program for folks who’ve booked a trip but end up on the unemployment line.