🤔 The USDOT thinks Loyalty Programs may be a scam

“Loyalty to petrified opinion never yet broke a chain or freed a human soul.” — Mark Twain

Maybe USDOT will be freeing us from the airline loyalty program overlords.

In today’s newsletter:

• The USDOT thinks Loyalty Programs may be a scam

• Blunders

• Bonus

Pense

Ever feel like your airline Loyalty Program is a scam?

Apparently, someone in the US Department of Transportation(USDOT) does. Now the question remains, will they get paid off or will they vindicate the consumer?

I’m not keeping my hopes up on vindication but here’s how AI killed the loyalty program.

USDOT claims that “unlike a traditional savings account, these rewards are controlled by a company that can unilaterally change their value.” They have “initiated a review to examine the fairness, transparency, predictability, and competitiveness of airlines’ rewards programs.”

This includes the following areas.

• Devaluation of earned rewards

• Hidden and dynamic pricing

• Extra fees

• Reduction in competition and choice

Interestingly, this comes on the heels of loyalty programs making announcements between 2023 and 2024 about how much money you should spend on credit cards to earn points changing some of the core around how airline loyalty programs are run.

So, here’s how AI affects loyalty programs (in general) or … how you are the product.

• Dynamic Pricing: One of the reasons this is coming under scrutiny now is that the price fluctuations of what your points will purchase depend on the airline flight price and point redemption price. Theoretically, if you flew out of one place often your points redemption rate could be lower if they deem it a competitive market.

• Recommendation: Whether it’s a credit card point offer, a flight offer, or even a travel package, the airlines have your data. So you and the person sitting next to you likely didn’t get the same offer — Not for the flight, the credit card, or the travel package. The question is… is it in compliance with consumer laws?

• Sentiment Analysis: Are you angry with the airline? Do hate missing out on deals? Do you prefer happy content? Well, AI analyses the tone of social media posts mentioning the brand, your interactions with customer support, and your responses to email headers and content. To figure out the best content to keep you happy.

With good data management processes, they really do learn a lot. And it will all be up for investigation eventually. Regulations around what AI can be used to do are still under debate.

P.S. I hope we find out why tickets cost more when booking from the US too. It’s ridiculous. A VPN and a second language can save you money on tickets.

Read the investigative announcement here

Blunders

Improving the state of AI project failures requires that we look at the failures and learn. So what’s a takeaway you can take to your next AI project?

Bonus

You should totally read this article:

 So, you agree—AI has a sycophancy problem