A 52-year-old travel agent has been indicted by the FBI on charges of wire fraud related to Delta’s SkyBonus scheme. He is thought to have defrauded the airline out of $1.75 million between March 2014 and April 2015.
A 52-year-old dual American and Ukrainian citizen has been charged on 12 counts of wire fraud by the FBI. According to reports by the New York Times, the charges against Gennady Podolsky relate to a 13-month scheme in which he conspired to fraudulently acquire points through Delta Air Lines’ SkyBonus points scheme.
The details of the case against Mr. Podolsky reveal how he used his position as a travel agent at Vega International Travel Services to amass $1.75 million worth of SkyBonus points.
According to the Washington Post, Mr. Podolsky created a false SkyBonus account. He registered the account for a fertility company owned by a family member of Vega International Travel Services’ president.
Using his position at Vega International Travel Services, he then fraudulently linked customer flights to the SkyBonus account, passing them off as employees. In this way he fraudulently acquired more than 42 million SkyBonus points, redeeming them for free air travel and a variety of valuable benefits.
Mr. Podolsky has been arraigned before a magistrate in the Northern District of Georgia, where Delta Air Lines is based.
Making the most of frequent flyer points
Gennady Podolsky’s lawyer, Seth D. Kirschenbaum, responded to the allegations, saying, “Mr. Podolsky’s conduct relating to that program was not fraudulent”.
In fact, his legal team claim quite the opposite. They say that rather than losing millions of dollars as a result of Mr. Podolsky’s actions, Delta Air Lines “netted millions of dollars of profits” from the customers he brought to the airline.
Whether or not Mr. Podolsky actually benefitted the airline in this way remains to be seen, but various tricks and tactics are often used to get the most out of frequent flyer points.
Understanding the systems airlines use to determine frequent flyer points has become somewhat of an art.
Points differ depending on the type of seat booked, the length of the journey taken and the frequency of flights taken by individual passengers. There are also various time-dependent promotions available for spending points.
All of this means that there are a number of ways passengers could ‘cheat’ the system.
How Delta Air Lines lost out
Using tricks to get the most out of frequent flyer points is usually not seen as much of an issue by airlines.
When individuals take advantage of these deals, the amount of money lost is negligible. In fact, it can be a good driver of customer engagement and brand loyalty.
In Gennady Podolsky’s example, the FBI doesn’t see his actions as a simple case of someone taking advantage of loopholes.
In a press release by the Northern District of Georgia U.S. Attorney’s Office, Special Agent Chris Hacker said,
“The fraudulent accumulation of frequent flyer miles in the travel industry may seem like a victimless crime, however, large corporations stand to lose significant profits”.