Frequent Flyer Fraud

By Jon Coss, CEO

December 10, 2019

As a frequent airline traveler, I closely watch my reward miles to make sure they are properly posted to my account.  I use the miles for family vacations, and it makes me feel a little better about the sacrifices I make traveling away from my loved ones for business.  It frustrates me to no end that the airlines keep adding restrictions and changing the programs to make it harder to accumulate and redeem miles.  But despite this frustration, I never thought about gaming the system like a Chicago man recently accused of fraudulently accumulating 42 million Delta SkyBonus points valued at over $1.75 million!

The alleged scheme itself wasn’t very creative.  In fact, it follows a pattern that we commonly see: an insider, with the ability to “steer” transactions, creates a fictitious business for their own benefit.  We often see this in programs like unemployment insurance where a fictitious business lays off fictitious employees and receives very real unemployment checks.  In this case, a travel agent (the insider) created a company where he diverted the frequent flyer miles for his clients’ flights.  He ran this scheme for 13 months and stole enough miles to fly around the world more times than anyone could ever desire. While reward travel program fraud is common, who’d have thunk it, the sheer size of this scheme makes it notable.  And I thought receiving a 50,000 mile bonus for that new credit card was a lot of miles.


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