You’ve probably been here before: A nasty, yet long-time customer is causing problems, again, and you want to tell him to hit the bricks. The Supreme Court gives you their blessing.
A recent High Court decision essentially says that companies have sole discretion to dump customers who are part of their loyalty plans. It’s an issue a Northwest Airlines frequent flier — albeit, a cranky one — took all the way to the Supreme Court — from which the airline emerged victorious.
The airline kicked Rabbi Binyomin Ginsberg out of its loyalty program for complaining too often about getting bumped from flights, and he repeatedly demanded compensation — often getting it — that the airline considered unfair. Eventually, the airline told him he wasn’t a welcomed member of their loyalty plan or on their flights.
Let him go
The airline’s justification for trying to boot the rabbi: It could operate its loyalty plan as it saw fit because it couldn’t possibly tailor its program to abide by the consumer laws of 50 states. And Northwest’s prerogative was to sever ties with customers who were difficult to do business with — even if they were supposedly loyal and entitled to some perks because of their membership in its loyalty program.
Ginsberg claimed he was let go because the airline wanted to dump customers with a high number of frequent flier miles because they were no longer profitable.
While the Supreme Court ruled that Ginsberg could sue for being mistreated by the airline, it rejected his argument that there was breach of contract. It said his breach of contract claims were based on terms he believed were an implied part of the loyalty program, and the court couldn’t base a decision on implied terms.
So what can organizations that have a loyalty plan in place learn from this? Make the terms simple, and make it clear (if you’d like the ability to do so) that you can drop customers from the plan for any reason at any time.
