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Alaska Airlines freezes out Aussie frequent flyers in credit card fraud crackdown

By Chris Chamberlin     Filed under: Alaska Airlines, Mileage Plan

Alaska Airlines has frozen out Australian customers from bulk-buying frequent flyer miles to redeem for free flights with partner airlines Qantas, Emirates and Cathay Pacific, citing "an attempt to reduce fraudulent transactions" made with international credit cards.

Changes suddenly introduced last week by the Seattle-based airline now limit purchases in its Mileage Plan scheme to members with a North American credit card and billing address, locking out Mileage Plan members in the rest of the world.

Like many of its US siblings, Alaska Airlines allows travellers to buy frequent flyer miles to boost their account and trade for free flights or upgrades.

However, many Australian members of Mileage Plan have suddenly found themselves unable to buy miles to use on future domestic US trips with Alaska Airlines as well as partner airlines.

"In an attempt to reduce fraudulent transactions, we are limiting purchases to credits cards issued in North America (Canada, United States and Mexico) only" explained Komal Ram, Alaska Airlines' Director of Loyalty Programs and Partners during an email interview with Australian Business Traveller.

"We had to make the changes fairly quickly to mitigate the increased number of fraudulent transactions we were seeing by international credit cards."

Credit card fraud stings frequent flyers

The root of the problem, Ram said, is people buying miles with stolen credit cards.

Most of the purloined plastic comes from Asia "but as a business policy and from our system-setup perspective we couldn't just prohibit transactions originating from specific countries where we see most of the fraud from (Asia)" Ram said.

"Until we have the infrastructure to reduce the overall fraud-related issues, we've limited the cards to those issued in North America."

Ram added that international cards represent the smallest fraction of Alaska Airlines' MileagePlan purchases, telling Australian Business Traveller that "only .05% of our transactions were issued on international cards last year, since we're a North American airline without any international flights beyond Canada and Mexico."

Why savvy travellers bulk-buy miles

Bulk-buying miles – especially from US airlines during 'bonus miles' promotions – is a favourite trick of frequent flyers, as it's often cheaper to buy and subsequently redeem those miles for travel than actually paying the regular airfare.

In just the past month alone we've seen special deals with American Airlines and United Airlines which can snare a miles-based award ticket at savings between 50-70% against regular ticket prices.

In the case of Alaska Airlines' Mileage Plan, its current 40% bonus promotion translates to flying Qantas business class from Sydney to New York for roughly $1,310 spent on frequent flyer miles, compared to the full ticketed price of $7,800.

Mileage Plan also allows free stopovers on one-way bookings, so when combined with the airline’s extensive partner network its miles are amongst the most valuable on offer.

Ram told Australian Business Traveller that Alaska Airlines understands that its crackdown may have caught out legitimate customers.

"We're assessing these changes very carefully and if we can find another way to limit fraud while allowing international transactions, we'll quickly make necessary changes to do so."

Additional reporting by David Flynn

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About Chris Chamberlin

Chris lives by the motto that a journey of a thousand miles begins with a single step, a great latte, an opera ticket and a glass of wine!

 

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1 on 11/3/14 by sagidec

That's a shame...

Lost revenue for the airline - or more like their loyalty division... :)

1 on 11/3/14 by KG

Not really lost revenue as mentioned in the article "only .05% of our transactions were issued on international cards last year...". Take into account that out of that 0.05% maybe 25% was fraudulent and the fact that people who are savy enough to buy mileage normally would use it for trips that actually probably cost AS a fair bit of money (multiple segment in F - can come to as much as 1000 to 1500USD), I can undertsand the reasoning. 

2 on 11/3/14 by gumshoe

I have strong doubts the real reason was CC fraud, I purchased some AS miles back in Dec. last with my AMEX CC, tried again on weekend with same CC was knocked back next day. 

I offered my Drivers Licence, Passport or anything else they required, no was the answer. I called AS and told the same message as this one received from points.com today. Of course there is no CC fraud in the USA is there!.

"We apologize for the inconvenience that this matter may have caused you. Please note that Alaska Airlines has made the decision to no longer allow any Alaska Airlines members who reside outside of the US, Canada and Mexico are not eligible to purchase Alaska Airlines miles". 

IMO the real reason its been knocked on the head is Aussies and the rest of the world jumped on this deal especially with 40% extra miles for free.

So while I sit in J with my lady on way to Europe on CX soon, I'll think of my Alaska Airlines milage plan and how good a deal I did buying their miles last year.

3 on 11/3/14 by Skipp

I wonder how they are tackling the issue of fradulent (or stolen) overseas credit cards for normal online ticket purchases? This must also be of concern, not just to Alaska Airlines, but airlines worldwide. Will the Alaska online booking engine preclude the use of normal ticket purchases with overseas credit cards? ..... I think not.

4 on 11/3/14 by gumshoe

Do other USA airlines have a policy of not selling miles to non residents?.

1 on 11/3/14 by KG

UA, AA and US all allow purchases with credit cards issued outside of North America.

1 on 11/3/14 by gumshoe

That being the case as thought its not fraud they are concerned about its the associate airlines getting the dirts because of cheap AS miles are and seat bookings have risen.

Do airlines buy seats off one another before or after points/miles are used by customers?.

2 on 11/3/14 by watson374

My family has no issues buying US Airways points.

5 on 11/3/14 by sagidec

This could one day happen to US, US and AA.

Not to be a wet towel... Let's hope not...

6 on 11/3/14 by DB

Terrible airline anyway.  No loss for me.

1 on 11/3/14 by KG

I have bought many miles form US (another terrible airline) over the years yet never flown them...I would suspect that many people actually by AS miles for partner redemption and not for flights on AS metal ;)

1 on 11/3/14 by gumshoe

(I would suspect that many people actually by AS miles for partner redemption and not for flights on AS metal ;)

You have that right, most of us just bought AS miles to get cheap J seats on affilliate international airlines, just like many do with the likes of AA for instance.

7 on 11/3/14 by Serg

What aircraft on the photo? And overall does anyone can make any sense out of the pic? To me looks like photoshop.

1 on 11/3/14 by KG

737-800 with winglets on the pic. Looks perfectly normal to me and not Photoshopped.

2 on 12/3/14 by Chris

Hi Serg,

The lead photo in this article is a crop and resize of a shot from the airline's official media gallery... you can find the original here.

1 on 13/3/14 by Serg

Thanks, makes a bit more sense, though very funny perspective indeed.

8 on 11/3/14 by eminere

Why does the headline point out Aussie frequent flyers in particular when everyone but North American credit card holders are equally affected?

1 on 12/3/14 by Mal

Because this is Australian Business Traveller not The Rest Of The World Business Traveller? Seriously, the site is aimed at Aussies so naturally those are the readers it's affecting.

9 on 12/3/14 by Mal

I hope this is not 'the thin edge of the wedge' as they say. Now that Alaskan has bitten the bullet, what chance that American and United will follow?

1 on 16/3/14 by dscorpcom10

I just bought the bonus offer with an Aussie debit card so all is not lost!

1 on 16/3/14 by Chris

Reports are that foreign transactions are being reversed within 24-48 hours of the transaction being accepted, so do keep an eye on your account (and your inbox) and see how you go!

1 on 16/3/14 by dscorpcom10

Will do thx for the tip

2 on 19/3/14 by gumshoe

What Aussie debit card was it?.

1 on 19/3/14 by dscorpcom10

Teachers Credit Union Debit card

1 on 29/3/14 by gumshoe

Did you leave your AS membership address in OZ?.

1 on 29/3/14 by dscorpcom10

Sure did

 

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