Can you sell your frequent flyer points?

While frequent flyer programs prohibit you from selling points to other people, the Internet offers ways around this. Here, Amy Bradney-George takes a look at how it works.

Most of the time, frequent flyer members are looking for ways to earn more points. But for some people, the idea of selling them is more appealing.

For example, if you couldn't find reward flights that worked with your travel plans and decided that getting cash would be a better way to pay for the tickets. Or if there were health reasons that you couldn't fly. Or maybe you just want to boost your bank account balance instead of your frequent flyer balance.

These types of reasons crop up on a number of credit card forums and discussion threads. But selling points isn't exactly a convenient option.

For starters, almost all frequent flyer programs have terms and conditions that prohibit the sale of points. This includes Qantas Frequent Flyer and Velocity Frequent Flyer, both of which only allow you to transfer points to an eligible family member.

But even then, Qantas Frequent Flyer has noted that you can't be paid for transferring points to someone in your family. If you breach these terms and conditions, it's likely your account will be suspended or cancelled.

Selling frequent flyer points on the grey market

Although airlines don't want you to sell your points, it's technically not illegal in most places (the US state of Utah is a known exception). So instead of a "black" market, there is a "grey" market for buying and selling points.

There are whole websites dedicated to the buying and selling of points, not just from frequent flyer programs, but also credit card reward programs and hotel loyalty programs. Some people even call themselves "mileage brokers" who help arrange the buying and/or selling of points.

My research found that most of these sites are based in the US, with only a few that offer to buy Qantas or Velocity Points. If you dig deep enough, you can find a few options though.

The process of selling your points varies depending on the mileage broker or website, but usually it's one of the following:

• You book the desired reward flight in the nominated person's name.
• You transfer the points to a nominated account.
• You provide your account details to the broker and they sort the rest of it out.

Each of these options carries the risk that the frequent flyer program will discover what's going on, as member accounts can be audited at any time. There may also be restrictions around booking reward flights for other people or for transferring the points to another account (as is the case with both Qantas and Velocity).

Giving your frequent flyer account details to someone else is also a big risk, because they could potentially get other personal details, such as your full name, date of birth and address.

The DIY approach

As well as mileage brokers and websites, I found a surprising number of points for sale on websites like Gumtree and eBay. In these cases, the individual seller sets the terms of the transfer.

For example, when offering to transfer the points to your frequent flyer account, they may claim you're a first cousin. The same goes for booking a flight for you with Qantas Frequent Flyer or any other program that only allows reward flights for relatives. Whether or not that sticks, though, is a risk the buyer would have to take. (Side note: Velocity's terms and conditions say you can use your points to book flight rewards for "a person other than the member", but other programs are less flexible).

Is selling your points worth it?

From the sites I looked at, the going rate for selling frequent flyer points ranges from US$10 to US$17 per 1,000 points, usually quoted as US$0.01 to US$0.017 per 1 point. So, for example, if you had 100,000 Qantas Points, you could get up to US$1,700 (approximately AUD$2,350) for them.

In comparison to the value of legitimate Qantas Frequent Flyer rewards, this is within the "value sweet spot" ($15 to $25 per 1,000 points). So, it does offer more value than most products or gift cards, assuming the sale is completed without any hitches.

To protect themselves from such issues, most of the point-buying services explain that you'll be paid as soon as the transfer (or reward ticket) is confirmed, although I did find a couple that offered payment up-front. Still, this is a high-risk way to use your points, compared to redeeming them for a reward flight or even gift cards that have an actual dollar value.

The debate around selling points legitimately

While you aren't supposed to sell frequent flyer points, a court in Brazil recently set a precedent for allowing it. In this case, someone had sold American Airlines AAdvantage Miles by booking a reward flight for another person. American Airlines then revoked the ticket, stating that it breached the program's terms and conditions.

But when the case was taken to court in Sao Paulo, the judge ordered American Airlines to reimburse the traveller. While the ruling wasn't covered widely and is in Portuguese, the gist of it is that airlines profit from frequent flyer programs and are likely to factor in the value of reward fares. As a result, the judge said that the rules around selling points were restrictive and went against the consumer's best interests.

This case could set a precedent for others in the future. It also raises a key point about the profits airlines make from frequent flyer programs. Adding to this particular factor is the information that, in 2017, Qantas made more money from selling frequent flyer points to program partners (such as credit card providers) than it did selling international flights.

So, the question must be asked: if the airline can profit from selling points, why not consumers?

At this stage, it remains a question without a clear answer. But, while that's the case, there's no doubt someone, somewhere, will be looking for ways to sell their frequent flyer points without getting caught.

Pictures: Shutterstock/Gumtree/eBay