Air Canada was fined the largest fine ever by DOT for stealing customer money. The company is now required to pay back $5 million to affected customers.
DOT’s fine of $750,000 is the largest ever handed to an airline for financially incentivizing bookings that did not occur. The penalties levied against Air Canada highlight how DOT has clamped down on airlines who attempt to game their system, and will likely encourage other companies with similar practices to change their business models.
Air Canada receives the largest fine ever from the Department of Transportation for stealing customer funds.
on November 22, 2021 by Gary Leff
During the epidemic, Air Canada was one of the biggest violators, holding customers’ money even when flights were canceled. This is plainly against US law, and Air Canada will pay the Department of Transportation’s largest-ever consumer protection penalties.
When questioned about it, the airline informed DOT that stealing money from clients and not providing the promised services is legal in Canada, and that US law doesn’t apply to them.
- for flights to the United States
- that have been marketed to customers in the United States
The Department of Transportation suggested a $25.5 million fine for Air Canada. During the epidemic, the DOT received almost 6000 complaints against Air Canada for refusing to offer reimbursements. They discovered 5,110 infractions and suggested penalties of $5000 per occurrence because, as the Department of Transportation states,
If an airline cancels a flight for whatever reason and the passenger decides not to fly, the customer is entitled to a reimbursement.
I sketched out how this would end when Air Canada issued their answer, snubbing US authority.
- The parties agree that Air Canada is governed by US law (for flights to the U.S. and sales to consumers in the U.S.)
- When flights are canceled, reimbursements are needed (anything else is fraud)
- However, the amount of penalties they’d have to pay would be a lot less than $25.5 million.
- Because they’d be given credit for the reimbursements that were eventually given to clients (which they did after the Canadian government shelled out subsidies to Air Canada much larger than the refund amounts and made refunds a condition of picking taxpayer pockets up North).
That’s exactly what occurred. The Department of Justice issued a news statement announcing the case’s settlement (via @Travel33t).
- Air Canada agreed to pay a $4.5 million fine.
- However, the company will get a $2.5 million credit for reimbursements issued to consumers.
- And you’ll just have to pay a fine of $2 million.
This is the biggest consumer protection fine ever levied by the Department of Transportation, while being a fraction of the initial recommended amount. It also acknowledges that Air Canada must adhere to US consumer protection laws, even though direct stealing from consumers is legal in Canada. Customers must remember and be reminded that during the epidemic, Air Canada was a terrible actor.
Of course, United was as well – but they caved in to DOT pressure. JetBlue was also affected, as were numerous other airlines such as TAP Air Portugal.
Other US and international airlines are still being investigated, according to the DOT, which plans to “release a regulation shortly to address consumer protections for customers who are unable to fly owing to government limitations.”
More From the Wing’s Perspective
The “canada flights” is a website owned by Air Canada. On the site, users can search for flights to different destinations. The DOT has issued the largest fine ever against Air Canada for stealing customer money.
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