Category: regulation

Regulation, especially to improve online safety and practices, including litigation incidental to such regulation.

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On geofencing at Polymarket

Last week prediction/betting platform Polymarket was in the news for a Justice Department raid, arising out of Polymarket allegedly accepting trades from US-based traders.  Suppose we stipulate that Polymarket betting is illegal for US users, and Polymarket must keep US users out, to the very best of its ability, to avoid liability under US law.  How exactly would it do so?

This question is familiar for me because my first service as a litigation expert, in February 2000, covered a surprisingly similar subject.  There, Canadian video streamer iCraveTV wanted (or purported to want) its service to be available to Canadians but specifically not to Americans.  I say “purported” because iCraveTV didn’t try very hard, and Americans could access the video easily — as I showed in two declarations as well as oral testimony.  In a 2001 regulatory comment, I pointed out that when there’s something valuable on the Internet that motivated users want to access, users have multiple methods to get the desired access.  My bottom line was if some body of material is so sensitive that a significant country rightly and properly disallows it, by far the easiest approach is to keep that content off the Internet altogether — as, to be sure, an injunction did to iCraveTV.

For Polymarket, the situation is somewhat different.  It seems many people agree that Polymarket is properly allowed in other countries, yet properly disallowed in the US. Fine: reasonable people, and reasonable countries, can disagree.  So, the engineering requirement is a system that robustly separates US users from international users — a geofence.  Importantly, the geofence must be strong enough that even motivated US users can’t climb over.  “Bob the Builder” fans, rejoice: Can we build it?  Yes we can!

Here’s how I’d approach robust geofencing in a scenario like Polymarket, where users register and provide substantial information.

1. Block all users whose network connection indicates a location in the United States.  Check a user’s IP address via standard geolocation services.  Easy enough.

2. Block users based on their registered physical addresses.  In any registration form that requests a street address, or any correspondence or other procedure that requests a street address, a US address is a clear indication of a US affiliation.  Gold standard here is to check that the address is truthful — not just that it exists, but that a person can receive a one-time PIN sent by mail to this address.

3. Block users based on their phone number.  A US phone number similarly indicates a US affiliation.  Check that the user really has this number via a one-time PIN sent by voice or SMS.

4. Block users based on payment mechanisms linked to their account.  Some might expect all Polymarket users to pay with a privacy-protecting payment mechanism such as crypto.  But in fact Polymarket supports debit and credit cards as well as bank transfer.   A payment instrument associated with a US financial institution indicates a US affiliation.

5. Block users based on geolocation in a desktop web browser.  Web pages can request a user’s geolocation using the W3C geolocation API.  Most web browsers ask their users if they want to share location.  If a user does share, and if the location says US, proceed no further.  It may seem implausible that users would voluntarily disclose, but one mistaken click could reveal — and a diligent site should at least try.  Maybe a site should require a user to grant geolocation permission in order to proceed — everyone has to be somewhere, and Polymarket could demand that users reveal.  On this theory, a failed geolocation API request would itself prevent login.

6. Block users based on geolocation in a mobile app.  In a mobile app, it’s much easier to seek a user’s geolocation — a common permission that users are accustomed to granting.  It might seem illogical for a user on a desktop device to have to switch to mobile just to confirm geolocation, but many sites require a switch to mobile for some aspect of security such as a secure photo upload, so this isn’t out of the question.  As usual, users can override device geolocation, but this requires increasing technical skill.

7. Detect proxy servers and VPNs.  A savvy user can use a proxy sever or virtual private network to bounce traffic through a server in a different country, then browse “from” there, with the server relaying requests and responses back and forth.  At first this might seem unworkable for a service like Polymarket: How would they know which IP addresses are used by proxies and VPNs?  But actually they have multiple reasonable paths:

  • The natural starting point is to ask the largest proxy and VPN makers to share their lists of IP addresses.  They may refuse, but the mere act of asking shows an attempt.
  • Test the largest proxy networks and VPNs to find representative IP address ranges (or pay a specialist to do so).  Hands-on testing also creates an opportunity to check whether there’s something unusual about their traffic (such as reverse DNS or a distinctive protocol-level header) that actually gives them away.  (In my testing, this happens surprisingly often.)
  • Look for implausible patterns in user IP address logins.  If a user is purportedly in Frankfurt at 8:00 and Seoul at 8:30, maybe the user is actually in neither place — and is actually bouncing back and forth via proxy or VPN.
  • Use these learnings to find others.  If a user is logging in from an IP address widely used by other users who bounce back and forth, the user is probably on a proxy or VPN.

The logical final step is to require affirmative proof of nexus with a country where Polymarket’s service is lawful.  When creating an account with Wise, I was impressed by their multiple methods of verification — photo ID, proof address, even uploading a picture showing face and ID together.  These must hinder users’ account creation — every step and every click cause users to drop off.  Despite that cost, such methods provide particularly strong proof of a user’s nationality.  And if Wise can do it in their highly-regulated sector (money transmission), it’s hard to see why Polymarket should have lower standards.

I take no position on the wisdom of laws disallowing Polymarket and kin.  And reasonable people may disagree about which of the tactics above should be required — how much a site like Polymarket can be required to inconvenience some of its users, in order to keep US users out.  Fair questions!  But to the basic adversarial question, I answer decidedly in the affirmative: A motivated site operator can keep out most US users, and can make sure that even those who sneak through end up feeling uncomfortable.

A separate challenge is the prospect of a site going through the motions rather than making a good-faith effort (not to mention investing in genuine innovation in this area).  Certainly sites have every reason to tread lightly: Every user means growth, and every user contributes positive expected profit.  So turning away more users means correspondingly weaker economic results.  These factors create a direct economic incentive to look the other way.  Meanwhile, a high-functioning compliance team would need real resources including talented engineers and data scientists.  If I were evaluating whether a site truly did everything possible, I’d want to see real resources invested, multiple methods tried and compared, and multiple imperfect methods used in combination in order to increase overall effectiveness.

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Revisiting Barlow’s Misplaced Optimism

Revisiting Barlow’s Misplaced Optimism, Symposium for John Perry Barlow, 18 Duke L. & Tech. Rev. 97.

As part of Duke Technology Law Review‘s Symposium for John Perry Barlow, I reflected on the perspective of early Internet luminary John Perry Barlow, the vision he offered, and what I see as the most promising sources of accountability for online behavior. My piece begins:

Barlow’s A Declaration of the Independence of Cyberspace calls for a “civilization of the mind in cyberspace,” and he says it will be “more humane and fair” than what governments have created. Barlow’s vision is unapologetically optimistic, easily embraced by anyone who longs for better times to come.  Yet twenty years later, it’s easy to see some important respects in which reality fell short of his vision.  Alongside the Internet’s many pluses are clickbait, scams, hacks, and all manner of privacy violations.  Ten thousand hours of cat videos may be delightful, but they’re no civilization of the mind.  With a bit of hindsight, Barlow’s techno-utopianism looks as stilted as other utopianism—and equally far removed from reality.

Beyond being overly optimistic about how perfectly the ‘net would unfold, Barlow was also needlessly skeptical of plausible institutions to bring improvements.  He writes: “The only law that all our constituent cultures would generally recognize is the Golden Rule.” But the moral suasion—and practical effectiveness—of the Golden Rule presupposes participants of roughly equal power and status.  It is no small feat to meaningfully consider what Joe User might want from Mega Social Network if the tables were turned and Joe owned the goliath.  As a practical matter, any claim a user has against a goliath requires state institutions to adjudicate and enforce.  When Barlow wrote A Declaration of the Independence of Cyberspace, tech goliaths were much smaller.  Plus, the Internet’s early users were in a certain sense more sophisticated than the mainstream users who eventually joined.  So the gap from little to big was much narrower then, arguably making governments less important in that era.  But as the big get bigger and as the Internet attracts average users who lack the special sophistication of early adopters, governments play key roles—adjudicating disputes, enforcing contracts and beyond.

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An Introduction to the Competition Law and Economics of “Free” with Damien Geradin

Benjamin Edelman and Damien Geradin. An Introduction to the Competition Law and Economics of ‘Free’.  Antitrust Chronicle, Competition Policy International.  August 2018.

Many of the largest and most successful businesses today rely on providing services at no charge to at least a portion of their users. Consider companies as diverse as Dropbox, Facebook, Google, LinkedIn, The Guardian, Wikipedia, and the Yellow Pages.

For consumers, it is easy to celebrate free service. At least in the short term, free services are often high quality, and users find a zero price virtually irresistible.

But long-term assessments could differ, particularly if the free service reduces quality and consumer choice. In this short paper, we examine these concerns.  Some highlights:

First, “free” service tends to be free only in terms of currency.  Consumers typically pay in other ways, such as seeing advertising and providing data, though these payments tend to be more difficult to measure.

Second, free service sometimes exacerbates market concentration.  Most notably, free service impedes a natural strategy for entrants: offer a similar product or service at a lower price.  Entrants usually can’t pay users to accept their service.  (That would tend to attract undesirable users who might even discard the product without trying it.)  As a result, prices are stuck at zero, entry may be more difficult, effectively shielding incumbents from entry.

In this short paper, we examine the competition economics of “free” — how competition works in affected markets, what role competition policy might have and what approach it should take, and finally how competitors and prospective competitors can compete with “free.” Our bottom line: While free service has undeniable appeal for consumers, it can also impede competition, and especially entry. Competition authorities should be correspondingly attuned to allegations arising out of “free” service and should, at least, enforce existing doctrines strictly in affected markets.

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Updated Research on Discrimination at Airbnb with Jessica Min

In December 2015, Mike Luca, Dan Svirsky, and I posted the results of an experiment in which we created test Airbnb guest accounts, some with black names and some with white names, finding that the latter got favorable responses from hosts more often than the latter. Black users widely reported similar problems — Twitter #AirbnbWhileBlack — and in September 2016 Airbnb responded with a report discussing the problem and Airbnb’s plans for response.

I promptly posted a critique of Airbnb’s plans, broadly arguing that Airbnb’s commitments were minimal and that the company had ignored a simpler and more effective alternative. But ultimately the proof is in the results. Do minority guests still have trouble booking rooms at Airbnb? Available evidence indicates that they do.

Below is a table based on work of Jessica Min (Harvard College ’18) as part of her undergraduate thesis measuring discrimination against Muslim guests. The table summarizes eight studies, with data collected as early as July 2015 (mine) and as late as November-December 2017 (hers), the latter postdating Airbnb’s report by more than a year. Each study finds minority users at a disadvantage, statistically significantly so.

 

Author/title/place and year of publication Dates of data collection Sample size Summary of findings Noteworthy secondary findings
Edelman, Benjamin, Michael Luca, and Dan Svirsky.

Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment.

American Economic Journal: Applied Economics, 2017.

 July 2015 6,400 listings across five U.S. cities Guests with distinctively black names received positive responses 42% of the time, compared to 50% for white guests.

 

 Results were  persistent across type of hosts (i.e. race, gender, experience level, type and neighborhood of listing).

Discrimination was concentrated among hosts with no African American guests in their review history.

Hosts lost $65 to $100 of revenue for each black guest rejected.
Ameri, Mason, Sean Rogers, Lisa Schur, and Douglas Kruse.

No Room At The Inn? Disability Access in The New Sharing Economy.

Working paper, 2017.

 June to November 2016 3,847 listings across 48 U.S. states Guests with disabilities received positive responses less often. Hosts  preapproved 75% of guests without disabilities, but only 61% of guests with dwarfism, 50% of blind guests, 43% of guests with cerebral palsy, and 25% of guests with spinal cord injury. Airbnb’s  non-discrimination policy, which took effect midway through data collection, did not have a significant effect on host responses to guests with disabilities.
Ahuja, Rishi and Ronan C. Lyons.

The Silent Treatment: LGBT Discrimination in the Sharing Economy.

Working paper, 2017.

 June – July 2016 794 listings in Dublin, Ireland Guests in male same-sex relationships were approximately 25 percentage points less likely to be accepted than identical guests in heterosexual relationships or female same-sex relationships. The difference was driven by non-responses from hosts, not outright rejection.

The difference persisted across a variety of host and location characteristics.  Male hosts and hosts with many listings were less likely to discriminate.
Cui, Ruomeng and Li, Jun and Zhang, Dennis J.

Discrimination with Incomplete Information in the Sharing Economy: Evidence from Field Experiments on Airbnb.

Working paper, 2016.

 Three audit studies.  Summarizing the results as to guests without prior reviews:
September 2016 598 listings in Chicago, Boston, and Seattle Guests with distinctively black names received positive responses 29% of the time, compared to 48% for white guests. The authors assess hosts’ apparent reasons for discrimination, including whether hosts were engaged in statistical discrimination and whether reviews reduce the problem of discrimination.
October – November 2016 250 listings in Boston and Seattle Guests with distinctively black names received positive responses 41% of the time, compared to 63% for white guests.
July – August 2017 660 listings in Boston, Seattle, and Austin Guests with distinctively black names received positive responses 42% of the time, compared to 53% for white guests.
Sveriges Radio’s Kaliber show,  Sweden October 2016 200 listings in Stockholm, Gothenburg, and Malmö For hosts who said no to guests with black-sounding names, a second inquiry was then sent from a guest with a white-sounding name. Of hosts who had previously declined the black guest,  many told the  white guest that the listing was available. Methodology follows longstanding testing for discrimination in US housing markets, sending a white applicant after a landlord declines a black prospective tenant.
Min, Jessica

No Room for Muhammad: Evidence of Discrimination from a Field Experiment over Airbnb in Australia.

Undergraduate honors thesis, 2018.

 November – December 2017 813 listings in Sydney, Australia Guests with distinctively Middle Eastern names received positive responses 13.5 percentage points less often, compared to identical guests with white-sounding names. Results were  persistent across all hosts, including hosts with shared properties and those with expensive listings.

Discrimination was most prominent for hosts with highly sought-after listings, where hosts can reject disfavored guests with  confidence of finding replacements.

My bottom line remains as I remarked in fall 2016: Airbnb’s proposed responses are unlikely to solve the problem and indeed have not done so. Truly fixing discrimination at Airbnb will require more far-reaching efforts, likely including preventing hosts from seeing guests’ faces before a booking is confirmed.  Anything less is just distraction and demonstrably insufficient to solve this important, and long-festering, problem.

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Keeping “Free Law” Free

Who should pay to store and distribute the litigation records in US federal courts? The answer is surprisingly contentious – and, by all indications, getting more so.

When the general public wants to read documents in US federal litigation, the standard method is PACER – the federal courts’ electronic record system. One might think this would be free to access – an efficient information system run from a few web servers with no significant incremental cost per document copied. But PACER dates back to 1989, when information was provided by modem with genuine costs for courts to obtain and provide dial-up hardware, not to mention servers and storage. Thus a tradition of charging — a tradition which has continued, now yielding fees of $0.10 per page. That sounds low, and it is… until a big session, perhaps looking for the proverbial needle in a haystack, requires browsing hundreds or even thousands of documents at corresponding expense. Meanwhile, with a fee for every page, PACER tells users that the meter is always running and browsing should be done lightly if at all – inconsistent with some readers’ preference to explore unfettered. Certain readers are distinctively at risk. For example, journalists often have limited budgets. For some pro se litigants, virtually any expense is unaffordable. Others are conducting research outside the country or are undocumented, unbanked, or for other reasons have no United States debit or credit card to use for payment.

In principle, litigation might put a check on public record expenses. Following up on a 2014 lawsuit, several non-profits sued the United States in 2016 as to PACER fees, alleging that the E-Government Act of 2002 allows only “reasonable” fees and then “only to the extent necessary.” The plaintiffs argue that PACER charges are higher, are not necessary, and indeed yield revenues that courts divert to other projects. For example, Quartz reports the federal courts spending 28% of PACER revenue on other court technology, such as monitors and sound systems — meritorious, no doubt, yet not obviously related to distributing court documents. Litigation is ongoing. But the disposition of the 2014 lawsuit gives reason to doubt the effectiveness of litigation to constrain PACER fees. For one, a sitting federal judge has every reason to defer to colleagues sitting on the Judicial Council (the body of judges that sets the PACER fee schedule). Indeed, any reduction in PACER fees would deprive the judicial branch of one of its primary revenue sources — a particular challenge if judges believe that Congress does not adequately fund the courts.

In the short run, the most promising response to PACER fees is RECAP, a browser plug-in that lets users share what they read on PACER. The idea is simple and elegant: Whenever a RECAP user reads a document on PACER, the RECAP plug-in sends a copy to RECAP’s servers which in turn store it for others to read free of charge. RECAP has used this approach since 2009, when it began as a graduate student project at Princeton University’s Center for Information Technology Policy (CITP). RECAP later grew with funding from non-profits public.resource.org and the Think Computer Foundation, as well as smaller monetary and in-kind donations from a variety of other groups and legal startups. There have been technical glitches, but on the whole the system has worked well.

A surprise development came in November 2017 when the Free Law Project (FLP), the operator of RECAP ever since the original Princeton team graduated and disbanded, announced major changes in how RECAP-collected data will be distributed in the future. Under the new plan, rather than making all RECAP-collected documents available to the public on the Internet Archive (IA) as soon as possible, FLP would hold the documents until the end of each quarter for a batch update to IA. FLP also proposed to upload litigation materials to IA in only machine-readable formats compressed into enormous multi-gigabyte tarballs, ending the human-readable individual HTML files that have for years made it easy for normal users with standard web browsers to see court records.

FLP says these changes are “necessary for RECAP to thrive” which I understand to summarize concern about FLP funding. I’m sensitive to the need to keep RECAP sustainable. But I question whether the November 2017 changes offer the right approach. Four specific concerns:

  • One, I don’t know that RECAP’s expenses need to be particularly high. Open source software development often does not entail paying developers anything at all. With the right motivation including public praise, some people may be inclined to donate their skills. Certainly RECAP needs new features and improvements from time to time, but most such improvements should last indefinitely once built, reducing RECAP’s ongoing expenses.
  • Two, charging for access to documents seems in sharp tension with RECAP’s promise to users. The organization’s very name — “Free Law” — calls for distributing materials not just without charge, but also without restriction. Indeed, FLP filed an amicus brief in the National Veterans Legal case stating that the FLP is a “nonprofit organization established in 2013 to provide free, public, and permanent access to primary legal materials on the internet for educational, charitable, and scientific purposes to the benefit of the general public and the public interest” (emphasis added).
  • Three, there are other promising means to support RECAP. Imagine a service that alerts interested subscribers to new documents in a given docket or referring to a given litigant or subject. Or a premium service that searches or cross-references document contents. Perhaps bulk downloads of hundreds of files en masse. RECAP could do all of this and more. If RECAP stays true to its nonprofit public-interest mission, and if its expenses remain as low as it seems like they could be, RECAP could also rely on further funding through grants, avoiding the need to try to monetize data that FLP itself calls “free” and “public.” These, in my view, are the more natural ways to fund RECAP’s operations. In contrast, charging for the documents themselves may be easier – no need to build new features – but it is too far from RECAP’s prior promises and users’ expectations, not to mention undercutting the public interest in the National Veterans Legal lawsuit.
  • Four, FLP announced the delayed data distribution as a fait accompli, not soliciting input ahead of time from the users who contribute documents and code to the RECAP plug-in. That’s a natural approach for a commercial service, and maybe appropriate for some non-profits, but hard to reconcile with the position of stewardship I had understood RECAP and FLP to aspire to.

More generally, I struggle to reconcile FLP’s changes with the organization’s non-profit status and with its overall position favoring free and unrestricted access to court documents.

A final twist is that FLP has already arranged for only its own CourtListener site to get premium access to RECAP’s documents as they are gathered by users and uploaded by the RECAP plug-in. FLP envisions that other sites and the public will get access only once per quarter unless they pay an undisclosed fee. Indeed, a few sites have sprung up to collect RECAP-gathered court records, repackage them in some way, and distribute them to the interested public. It’s hard to see a principled reason why only CourtListener should get superior and more frequent access to the documents. They’re public documents, gathered by the US courts themselves, and then submitted for public archival by participating users who support the “Free Law” RECAP concept. Nothing in users’ or donors’ understanding or their agreement with RECAP calls for RECAP providing the documents to only one site but not others.

Tensions have been brewing, including a pointed critique from Aaron Greenspan (whose PlainSite service is among the victims if RECAP begins to withhold data from other services), as well as Internet Archive staff questioning the purpose and effect of the proposed changes. But getting this right requires more users speaking up about what they want from RECAP and what they expect of its leadership. For myself, I want a RECAP that lives up to the principles articulated in 2009 — gather court documents and distribute them without charge or restriction.

(Added January 25, 2018) On Github, user @johnhawkinson pointed out the FLP is still posting RECAP data to CourtListener, and indeed indicates that it will continue to do so promptly (even though IA uploads are to be delayed). Indeed. And at present, no CourtListener TOS limits how users access the site; it seems users could download thousands of documents for their own purposes, even scrape the site and its contents if that better matches their requirements. Kudos to CL for not banning (or purporting to ban) those methods. Yet favoring CourtListener, rather than the authoritative and widely-trusted archive.org, seems to me a troubling change. FLP’s stated reason for putting data only on CL, and not promptly on IA, is to make the service “sustainable” which I take to mean an effort to raise funds, which in turn entails withholding features or data (or both) from those who don’t pay. And FLP is already asking for payments from those sites that seek full access to bulk RECAP data. Such restrictions and charges are exactly what RECAP’s historic mission did not contemplate or indeed allow.

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Impact of OTA Bias and Consolidation on Consumers

Online travel agencies (“OTAs,” such as Expedia and Priceline) charge hotels fees that can reach 25% or even more. In today’s post, I assess the causes of these fees as well as the tactics OTAs have used to punish hotels that object — penalizing hotels that discount through other channels, while simultaneously boosting those that agree to pay more. With Expedia and Priceline (including the many other companies they have acquired) jointly controlling 95% of the OTA market, competitive forces impose limited discipline on OTA practices.

My bottom line: OTA practices drive up costs to both hotels and consumers. At the very least, OTAs need improved disclosure of both bias and advertising. Meanwhile, it’s hard to defend OTAs’ efforts to punish hotels that sought cheaper distribution elsewhere. The time is right for the FTC and state attorneys general to examine this market.

My full article:

Impact of OTA Bias and Consolidation on Consumers

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Enumerating Uber’s Scandals

Collecting my thoughts for an article about Uber’s mounting scandals and the proper legal and regulatory response, I took some time to review the range of recent concerns. It’s overwhelming — new issues arising daily, and prior problems almost inevitably forgotten. But by dividing the misdeeds into a taxonomy of subject areas, I’m seeing trends — identifying the areas where Uber falls furthest short. I offer my notes to others in hopes that they can help.

My tabulation:

Uber Scandals

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Three Problems in Protecting Competition (teaching materials) with Lena Goldberg

Edelman, Benjamin, and Lena Goldberg. “Three Problems in Protecting Competition.” Harvard Business School Case 917-012, November 2016. (Revised March 2017.) (educator access at HBP. request a courtesy copy.)

In three mini-cases, readers see a range of disputes in competition law—and apply legal principles to assure fair competition.

Teaching Materials:

Three Problems in Protecting Competition – Teaching Note (HBP 917014)

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How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

In the United States, there are seven basic options for a consumer who wishes to pursue a dispute with an airline, travel agent, or tour operator:

  1. Informal correspondence with airline customer relations staff. Easy, usually via web site submission. You’ll typically get a response. (Indeed, US Department of Transportation rules require an airline to send a substantive written response within 60 days.) But there’s no guarantee that the complaint will be handled by someone who truly understands, nor that the response will be helpful or correct. The airline may anticipate that many people complain but few follow up on an unfavorable response — reducing their incentive to provide a full resolution or even conduct a complete investigation. Some customer relations staff may not have sufficient information or training to investigate unusual problems.
  2. Credit card chargeback. This is most useful if there is a recent, easily-provable, and impeccably documented overcharge. In principle, the merchant (airline) is obliged to demonstrate your acceptance of the charge and their performance of the promised service — and in principle the burden of proof is on their side. Furthermore, credit card disputes are adjudicated by card network staff who do not directly report to airline management, reducing some conflicts of interest. Credit card procedures are particularly useful to passengers in case of bankruptcy of an airline or travel agent, obliging the airline’s bank to provide the refund even if the airline cannot, whereas other methods typically are typically unable to assist in that circumstance. Furthermore, a successful credit card chargeback yields a direct payment (refund) to the passenger, with no need to pursue a collection effort against a distant company. Nonetheless, I am told that most credit card disputes are resolved in favor of airlines, as their positions are supported by at least an appearance of reliable records. Moreover, credit card dispute processes make it difficult to challenge records as unreliable or incorrect, or to challenge airline policies as violating law or regulation. These shortfalls make credit card disputes a poor fit for complex matters or unusual allegations.
  3. Litigation, most often in small claims court. Some judges are open to the suggestion that airlines screwed up, broke the law, or even failed to follow their own rules. Of course there’s no guarantee that the judge will be an expert or will be able to take the time to understand the unusual situation you describe or the specialized rules and laws pertaining to aviation. Decisions are usually unpublished and informal, making it easy for passengers’ arguments not to be considered in full.
  4. Pursue special state claims. Some states offer “seller of travel” laws (which could apply based on your residence, the state where the ticket was purchased, or the state where the online travel agency is based). These occasionally provide some recourse or compensation, for example if a travel agency or tour operator goes out of business or absconds with your money.
  5. Pursue any redress available under foreign law. Consider such options if the flight was international (potentially including domestic segments of an international itinerary) or the ticket was purchased from an airline office, travel agency, or tour operator outside the United States. Some countries offer greater protections than the United States. That said, most consumers would face significant difficulties pursuing claims in a jurisdiction where they do not reside.
  6. Informal DOT complaint (via this web form). DOT routes your complaint to a higher caliber of representative from the airline, compared to #1, and sometimes these staff are better positioned to assess your claim, consider the merit in your position, and provide a meaningful resolution. In principle DOT reviews the resolution of each matter, and this oversight or potential oversight imposes causes airlines to be more careful in responding to consumers’ informal DOT complaints. On the other hand, the proceeding is nonetheless secret and off-the-record. Your complaint will do nothing to help anyone else and typically won’t cause a change that fixes the underlying problem. DOT staff are sometimes involved in mediating these disputes, but you can’t count on this kind of assistance. Indeed, the Office of Inspector General found that the DOT’s reviews of passenger complaints are insufficient to determine whether airlines engage in unfair and deceptive practices.
  7. A formal DOT complaint via the process detailed below. These proceedings are formal and on the record. You’ll be corresponding with an airline’s designated representative, typically an attorney. All filings will be published on the web for anyone interested to read, and Airlineinfo and its Twitter feed make it particularly easy for the interested public to find and follow these disputes. DOT staff ultimately prepare a written decision summarizing each party’s position and offering an assessment. These factors increase the likelihood of a full investigation and proper analysis. That said, airlines take the position that DOT lacks authority to order refunds to affected passengers. Furthermore, decisions are often slow, commonly taking a year or longer.

This page elaborates on the seventh option, formal DOT complaints, as this process is not widely understood and not widely used despite its important potential benefits as detailed above.

Filing a formal complaint with the DOT: instructions and what to expect

For those inclined to proceed with formal DOT complaints, here are my tips based on the several such complaints I have filed and based on others’ complaints that I have followed.

There are five steps to filing a formal complaint with the DOT:

  1. Use my Microsoft Word Complaint Template to write your complaint. Explain the airline’s violation as clearly as you can. Use exhibits if needed to support the factual allegations. Consider exhibits to show relevant screenshots, call recording transcripts, ticket printouts, correspondence with customer relations, etc. Be sure to fill in your name in complaint header. On the title page and first page, leave the ___ placeholder (after the year) as docket number in your complaint; a docket number gets assigned by DOT staff after submission of the initial complaint. (If you use the template to file a reply or other supplemental document, insert the docket number then.)Avoid including personal information you do not want to reveal to the public. If needed, you can prepare two versions of the file – one “public” (redacted, for uploading to Regulations.gov in step 4 below) and one private (with ticket numbers, passenger names, etc. for sending to DOT staff and airline attorneys in step 5 below).See sample complaints to confirm format and get a better understanding of typical style.
  2. Find the registered agent for the airline you’re complaining about. Use the DOT’s dockets for agents for service of process for foreign airlines or for domestic airlines, as appropriate. Insert the agent’s name and email onto the Certificate of Service page where indicated. After finding the agent’s name, you may need to use web search to find the corresponding email address. Many large airlines use attorneys at outside law firms as their designated agents. In that case, you can check the law firm’s web site or even call the law firm’s main line to request the attorney’s email address.  (Unfortunately sometimes the designated agent is out of date.  See DOT admonition to airlines to keep this up to date.)
  3. Save the Word file into PDF for upload and submission.
  4. File the public version of the complaint on Regulations.gov. Go to the unusually-named Instructions on Filing a Submission to DOT–OST for applications/petitions/exemptions and any other items for which a Docket does not exist. Press the Comment button, then submit your complaint.  Suggested title: “Third party complaint of [your name] – [airline name] – [date]”.  Suggested comment: “Please see attached complaint”. Use the Attach Files command to submit the public version of your complaint PDF.  Provide your email address, first name, and last name when prompted.  It is optional to provide your contact information through the Regulations.gov submission tool. Note the Comment Tracking Number that results from your successful submission. Although Regulations.gov uses the term “Comment” during the submission process, your complaint will actually be posted as its own docket, not as a comment to any preexisting docket.
  5. Serve the private version of the complaint on the airline’s agent and on the DOT by email:

    To: [agent email from step 2], blane.workie@dot.gov; robert.gorman@dot.gov; kimberly.graber@dot.gov

    Subject: Third party complaint of [your name] – [airline name] – [date]

    Greetings,

    A redacted public complaint (as to certain practices of [airline name]) was filed on Regulations.gov earlier today. Attached is the full version including private information.

    Regulations.gov Comment Tracking Number: [insert comment tracking number]

    Thank you,

    [your name]

The DOT contacts change from time to time. The three DOT contacts listed above are current (to my knowledge) as of October 2016.

Here’s what to expect after filing:

Once your complaint is docketed at Regulations.gov, you’ll usually get an email from DOT staff to that effect. If not, wait a few days, then run a search for your last name on Regulations.gov. Each Regulations.gov docket page provides a mechanism for automatic email notification when new filings are made in that docket. I highly recommend using that notification mechanism, including renewing it annually if your complaint remains unresolved after one year. Sometimes DOT or airline staff may forget to (or otherwise fail to) notify you of a new filing.

Formal complaints are governed by DOT rules contained in 14 CFR 302 subpart D. It’s useful to read those rules to learn what to expect.

An airline must respond to your complaint (by filing its “Answer”) within 15 days, unless it requests and receives an extension from DOT. DOT staff usually provide such an extension when requested. Airline representatives will ask you to accept, which you virtually must – in the sense that if you declined, the DOT would probably grant the extra time anyway. It’s also polite to grant the extra time; the benefit of this formal complaint process is its formality and its rigor, not its speed.

There is no guarantee of any particular timing for DOT judgment or resolution. Many complaints have gone more than a year without resolution. After a lengthy wait, you could inquire with DOT staff or contact your federal representatives to seek their assistance. I have not used these methods.

In general, a complainant has no right to respond to an airline’s Answer. If you want to file such a response (a “Reply”), you should seek agreement from the airline to do so (typically followed by a counter-response from the airline, called a “Surreply”). You must then seek DOT permission to reply. This can be an informal email to DOT attorneys, CC’ing the airline representative. You may want to propose a maximum page length, timing, and purpose. You’ll adapt the Complaint Template to file your reply, including replacing the “Complaint” heading with “Reply” (in every location including first page caption, second page caption, first page header, and subsequent page header) and adding the docket number on the first and second pages.

Once you file a formal complaint, you should avoid informal communications with DOT staff on the same subject.

Others have reported that airlines sometimes attempt to “buy off” a complainant privately – provide some money or whatever a complainant is requesting, in exchange for the complainant withdrawing the complaint. If you accept such an offer and withdraw your complaint, there will probably be no further proceedings in the docket, and hence nothing to benefit other passengers with similar problems. On the other hand you’ll get an immediate personal benefit.

I am unable to provide legal assistance to complainants, but I am often able to provide procedural pointers based on my experience in this area. Contact me.

Credits

My sincere thanks to Edward Hasbrouck, whose special knowledge of all things aviation-consumer spurred my interest in this subject. Thanks also to Mike Borsetti, whose knowledge of fare rules helped me understand my rights.

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Formal DOT Complaints – A Guide for Consumers

When something goes wrong in air travel, consumers often need to reach an appropriate resolution with airline staff. But the standard methods are not always sufficient — sometimes ordinary customer relations staff are intransigent or just unresponsive, and a credit card chargeback is a poor fit for disputes that can be surprisingly complex.

In today’s post, I present a dispute resolution channel most consumers do not know about: formal complaints before the US Department of Transportation. The process lives up to the “formal” label, requiring documents formatted in a particular way, submitted through both web upload and email (neither particularly intuitive), with all proceedings posted for public review. But this approach typically goes straight to airline attorneys, and the on-the-record public proceeding helps assure high-quality discussion. In today’s piece, I explore known dispute resolution methods, then give interested consumers a guide to the DOT Formal Complaint process.

My guidance:

How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process