Airlines and Opting Ethics

Here’s a post with my co-author and colleague at Yale Law School, Jonathan Macey. Jon is the author of the just-published book Corporate Governance: Promises Kept, Promises Broken.

Airlines and Opting Ethics
By Ian Ayres and Jonathan Macey

Some airlines and travel sites are trying to goose their revenues by running a new opt-out insurance scam. As Tribune Media Services reports:

When Angela Gross buys a ticket through Frontier Airlines’ web site, it tacks on an extra $10.95 for travel insurance. How did it manage to do that? By having a [pre-]checked box on the booking screen that she had to opt out of. Now Frontier is balking at a refund.

If you’re not paying close attention while finishing your ticket-purchase transaction on the web, you may well be on the hook for an extra insurance fee.

Pre-checked boxes committing people to receive stuff unless they affirmatively opt out have been around for years. But until recently, failure to opt out just means that you are likely to receive spam because you have agreed to have your contact information shared with other vendors. Like most others, we have been caught asleep in the past only to find ourselves deluged with hordes of subsequent emails containing unwanted “special offers.” What’s new about the latest wave of opt outs is that very prominent retailers are brazenly adding services that will increase the upfront price of their services unless the customer affirmatively opts out.

We learned about these shenanigans first hand. About a month ago, Ian was checking in at an airline kiosk and was almost tricked into paying $75 for a coach seat with a little extra legroom.

The kiosk touch screen was designed with the standard “continue” button in the lower left-hand corner of the screen. But after hitting several “continues,” Ian landed on a screen with a button already set in the “accept” position. It took Ian a moment to figure out that he was about to agree to pay a $75 seating upgrade fee and then some additional time to find the by-no-means-obvious button on the screen that he had to click to avoid the upgrade — and the fee — and continue with his check in.

The upgrade at the kiosk did not involve a pre-checked box. But by putting the “accept” button in the lower left-hand place — where users had become accustomed to clicking, having just clicked there several times — the airline (diabolically) created an ingenious sort of positional opt out. To avoid the fee, the customer has to stop doing what she’d been doing and physically move her hand to another part of the screen.

Jon was the near-victim of the more explicit opt-out scam that involved more serious money. Shortly after reading about Angela Gross’s experience with Frontier Airlines, Jon happened to be using to buy five airline tickets from New York to Paris for himself and his family. After buying the tickets and after logging out of Orbitz, Jon received an email from an insurance company purporting to thank him for buying … you guessed it … trip insurance!

By not noticing that Orbitz had used a pre-checked box, Jon had “agreed” (by failing to disagree) to a whopping $156.90 trip insurance addition to his airline ticket price, taxes, and airport fees. The fun really started for Jon when he went into fast forward to set the matter right. It turns out that even though customers can go back and electronically cancel the airline tickets that Orbitz sells, customers cannot cancel the insurance that Orbitz sells through the website where it was brought. In fact, the insurance could not be canceled through Orbitz at all, but only by contacting the insurance vendor Access America directly by phone.

When Jon reached the insurance company, he learned that the insurance was only refundable if the policy is canceled within 10 days of “purchasing” the policy (i.e. after most people received their credit card statements for the purchased tickets, and after many customers had already gone on their trips, thereby “using” the insurance!). In order to cancel, Jon was required to listen to a pre-recorded message informing him of nothing (other than that the company was trying to raise the transaction costs associated with canceling their insurance).

When Jon complained to Orbitz, the company sent him the following response:


It’s refreshing to receive a form letter that says “I understand … you are not happy.” But the message misrepresented how Orbitz’s website actually functions. The OrbitzTLC team’s message asserted that travel insurance was added to Jon’s reservation because he manually checked the box “Yes, Add Airline Ticket Protector for USD …” In other words, Orbitz erroneously claimed that its program required a customer to opt in to it. In fact, the program required Jon to affirmatively opt out of the program in order to avoid “buying” the insurance.

To make sure, we went back on and found that, consistent with Jon’s recollection, the travel insurance option, unlike numerous other options on the website is pre-checked, comme ça:


In some ways, all’s well that ends well. Access America did finally refund Jon’s money. And a very nice and knowledgeable Orbitz employee told Jon that the travel insurance is only opt out for foreign flights and tourist packages.

But the episode raises troubling issues:

What’s to stop retailers from pre-checking a $300 or $3,000 charge for trip insurance, or pre-checking a life-insurance policy in case the plane crashes?

What does the trip insurance actually give you that you don’t already have? The Access America policy is incredibly narrow in scope — basically only covering you if you get ill or die because of an unexpected event (no pre-existing conditions). We’re betting that many airlines would give you a refund under such circumstances, even without buying the insurance. Other insurance companies do offer insurance that includes coverage for pre-existing conditions.

What happens to people who don’t learn of the coverage until after the 10-day cancellation period has run? (Jon was told that Orbitz might work with the vendor to persuade it to cancel the insurance protection under certain conditions, but that: 1) the decision to cancel and refund was up to the insurance company, not Orbitz; and 2) if the trip was completed no refund would be allowed.

How many needless cancellation hoops (making six rather than one call, listening to a 20-minute message, submitting an affidavit) can be imposed as preconditions to cancellation?

We’re particularly concerned that Orbitz sent Jon an email that inaccurately described this program as an opt-in rather than as an opt-out program. We assume that this misrepresentation by Orbitz was inadvertent and will be corrected. Jon was told by the Orbitz representative who called him that the earlier Orbitz email was incorrect and that the issue had been passed along to “management.”

But the 800-pound gorilla in the room is the opt-out scam that began this entire travail. In their recent best-selling book Nudge, Cass Sunstein and Richard Thaler show that default setting can be a powerful force for the social good. But default setting can also be a powerful force for mischief if controlled by those with ill intent.

We wonder whether the fact that opt outs were only recently introduced in the travel industry — and only after Nudge was published — is merely coincidental. Perhaps the insights in the book provided valuable, if unscrupulous, tips to the marketers who help design websites for the travel agency.

As lawyers and economists, we would have predicted that reputational sanctions would have kept Orbitz from engaging in these sorts of shenanigans. Experience, however, is proving us wrong.

Particularly troubling is the fact that Orbitz must know what it is doing, because it sometimes uses opt-in marketing strategies, and it sometimes uses opt-out marketing strategies. It seems to us that there must be a reason for this.

If other retailers follow suit, this might be a place where a light legal intervention is called for. We, of course, would allow consumers to buy trip insurance or any other add-on service they really want. But it might be wise to require that any add-on services that add to the advertised price be offered solely on an opt-in basis.


Anyone at a local flea market - or third world bazaar - knows that you see all the goods and settle on a price before even thinking about showing any money. Just do not enter any credit card informaion before the final total has been made apparent. If it is asked, go somewhere else. No one can take away our power of choice.

In this country, at least.

Teresa Turner

If Orbitz loses customers for life then the amount made on travel insurance may actually lose them money in the long run. I will no longer use Orbitz.

Philip, London

Easyjet in the UK have been running a Triple Whammy scam (not just on insurance) on online bookings for a while now.

As they also charge for each piece of hold luggage, the ordering process assumes one piece per passenger, so if you're not carrying any (quite a common occurrence on a low-cost, short range airline), you get hit. That's the first whammy.

The second whammy comes with insurance. You are opted in - and it takes a further 2 /3 clicks plus a recalculation to opt back out.

The third whammy is arguably the most insidious of the bunch. On the first screen after you have configured your flight, a statement in *bold text* says that prices 'include all taxes and charges.'

No they don't. Once you've filled in all your details and are about to hit the 'Book' button, an onerous list of credit and debit card charges, dependant on your choice of payment method is revealed. Only what is possibly the least used card in the UK (I'll spare its blushes), escapes.

You think you've got it bad? ;)



I can't say I agree that ethics and law are coextensive. More often, legality is a much more tightly bounded box sitting as squarely as possible well within the bounds of the ethical lines. By its very nature ethics has blurry borders, and the constant effort of the law (whether you think its successful or not) is generally to try to make a cleaner map, which normally means cutting in at the corners and sticking to where things are a little less ambiguous.


Some of the responses in this thread are truly amazing. Something is truly wrong if your revenue model relies on your customer making a mistake, purchasing something they had no intention of. That is treating your customer as an adversary rather than a partner with whom you're creating a win-win situation.

And make no mistake where these businesses and some of the commenters here are coming from. Take what "X" said previously in comment #12, "To be honest, I would prefer that you continue not to read the not-so-fine print allowing you to opt out; you are subsidizing the purchases of those who do." What an anti-social, self-centered view.

James Pilant

It is astonishing to me that some of those making comments defend this practice. Making people opt out to not be charged is unconscionable and should be illegal. The idea that companies should make money by any means possible as long as they don't directly break the law is repugnant to Christianity, both Catholic and Protestant, every major religion, virtually every school of philosophy and basic intelligence. It is wicked to encourage this kind of legalized theft. Consumers should not have to read the fine print. Consumers should be treated as valuable assetts not just a collection of sheep to be sheared by the greedy.

kevin grier

"In their recent best-selling book Nudge, Cass Sunstein and Richard Thaler show that default setting can be a powerful force for the social good."

So Ian, what is the "social good"? Is there a representative agent? Or do you believe somehow that Sunstein and Thaler have been gifted by the gods so that they can make valid interpersonal welfare judgements? Nudge is about getting people to do what you want. Calling it "Social good" is like putting lipstick on the proverbial pig.

If you like it, it's social good. If you don't like it, it's a disturbing evil trend. Give me a break.


Thanks for posting and discussing this issue. I could not agree with you more. The opt-in feature should always be defaulted to opting out of the question or service. Just last night I booked a flight on Orbitz and was shocked to see the add-on of the Trip Protection through Access America. I was able to cancel the policy today, but was very bothered and concerned that this was tagged on without my expressed acknowledgment. I inquired with the Access America operator that this is not such a great business practice allowing Orbitz to passively add-on the insurance and her response was that they have no control over what Oribitz does on their web site. Well maybe Access America should be concerned and Orbitz should discontinue this practice.

Discounting the obvious legal ramifications of both parties, especially Orbitz and looking at this issue from just a sales and marketing point of view it is very caustic. I have been a frequent user of Orbitz and this practice not only sours me on their service but now the insurance company, Access America, which I've had never done business and feel now I never will. I smell class action.


Jon Miller

What is missing is honor. So much in our society is lacking in that value. It's funny how some business people, lawyers, and perhaps politicians understand that ethics brings long-term rewards that are greater than the quick dollar you can make fooling people. By rewards I do not mean spiritual solace or heavenly grace (though it may happen that way) but actual material profits. The people of this country and the world have to demand honorable business transactions and not settle for less. I postulate that good faith and fair dealing lie under long-term social order and success.


American Express just called me regarding a fraudulent charge from Access America after purchasing a ticket on Orbitz. I guess I am not the only one to consider this marketing approach fraud.


Orbitz is still at it! I just had this scam happen to me booking a trip to London. Fortunately, I caught the email from Access America quickly. After wasting a half hour of my time, I tracked down the number to cancel, and was issued a refund.

For fun, I went back and "booked" another trip on Orbitz -- stopping before hitting the final payment key -- to find out where I missed the checked button. It turns out the button was unchecked; they are charging this fee without even showing you a checked button!

I will be filing a complaint with the FTC at