Rates on a Plane: The Expanding Frontier of Credit Card Sales

Passengers are used to hearing flight attendants give safety briefings and warn of the perils of using their smartphones below 10,000 feet. But in recent years, flight attendants have added a new in-flight announcement to their repertoire: the credit card sales pitch.

It’s a bit jarring the first time you hear the pitch and see the flight attendants handing out applications instead of tiny bags of peanuts. But it shouldn’t come as a surprise, really. Cashiers at retailers have been pushing applications for store cards for years now, with no particular financial expertise to back up their sales pitch. And with the major airlines all offering rewards cards of their own, it makes sense that their primary customer service representatives — the flight crew — have likewise been enlisted to get customers to open new credit card accounts.

But it does raise questions about who is and isn’t qualified to sell a complex, fee-laden financial product like a credit card. Retail cashiers, after all, are mainly trained to process purchases and returns, while flight attendants are mainly there to ensure passenger safety and pass out refreshments. Should these employees be selling credit cards?

“Clearly, there is some training that has to be put in place so people don’t cross the line as they did in the case of Capital One and American Express,” says Kathleen Day of the Center for Responsible Lending. She’s referring to two high-profile cases in which credit card issuers were fined heavily by the Consumer Financial Protection Bureau for what the government agency deemed deceptive practices. In the case of American Express, the company was found to have promised $300 sign-up bonuses that it failed to deliver. Capital One, meanwhile, was ordered to refund $140 million to customers after it was found that the company’s call-center vendors misled consumers about the benefits of “add-on” products like credit monitoring and payment protection.

In neither case were ill-trained retail workers to blame; rather, the violations were a result of bad marketing practices. But it highlights the various ways that consumers can be misled during the sales process by features that go well beyond the interest rate and annual fee – features which a salesperson may not be prepared to fully explain.

“It is not new to have all kinds of people selling credit cards,” says Linda Sherry, director of national priorities for Consumer Action. “It’s not an issue of being uninformed, but being tightly controlled to stick to a script and not having much more info outside the script.”

That certainly seems to be the case with the retail and airline workers enlisted to push the applications. Brad Smith, a former flight attendant who now writes for travel site Savvy Stews, recalls that when his airline began in-flight credit card pitches a few years ago, the training process for the flight attendants was brief.

“It was in the ‘must-read items’ that we were going to start doing these credit card applications, and for a week the credit union person was in the check-in room, handing out applications and explaining the process,” he recalls. “It wasn’t exactly a complicated process.”

Indeed, the “process” mainly consisted of just reading from a script and then handing out the applications to any passengers who expressed interest. Smith notes that some flight attendants were more proactive than others in making the sales pitch to individual passengers, as the airline offered them a $50 paycheck bonus for every successful sign-up. But if passengers had any questions about the terms of the card agreement, they were just supposed to direct them to a frequently-asked questions section on the application.

So flight attendants aren’t being asked to explain credit card terms and field complicated questions — they’re just supposed to read a script and hand out applications. In this light, it seems that such sales tactics aren’t much different than a credit card company mailing you an application. Only the distribution system is different.

Still, point-of-sale credit card sales, whether at the cash register or at 30,000 feet, can still be a problem. Much as retailers lure you into getting a store credit card by offering a big discount when you get to the cash register with your merchandise, so too is the in-flight sales pitch timed to entice you.

“After you’ve just paid $25 a bag is the perfect opportunity to get you to sign up for their credit card that waives baggage fees,” says Credit.com personal finance expert Gerri Detweiler. “And ironically, even if you are sandwiched in a middle seat in economy class, it’s still tempting to sign up for a new credit card that will give you a free flight.” And much like that store credit card, the airline rewards card that gives you so many perks also has its drawbacks — a hit to your credit score, for instance, or an annual fee.

So is it problematic that ordinary retail and airline employees are being enlisted to sell credit cards? Yes, in the sense that people might be enticed by the rewards into signing up on the spur of the moment without fully understanding the risks and downsides. And if the rewards for getting sign-ups are lucrative enough, it’s likely that some of these representatives may be tempted to stray from the script and make the card seem more attractive than it really is.

But we don’t see much evidence of that. While the CFPB has received more than 600 consumer complaints in the “advertising and marketing” category, a spokesperson notes that the agency doesn’t provide categories for consumers to complain specifically about sales tactics or inadequately explained terms. And the actions that the CFPB took against Capital One and American Express seem to be a result of bad marketing practices on a mass scale, rather than the action of a few rogue salesman.

Still, with marketing departments eager to sell cards and customer service representatives eager to get their hands on sign-up bonuses, it’s not unlikely that the sales pitch you get in-flight or at the check-out counter may be overly rosy. As such, it’s best to pay less attention to the pitch and more attention to the fine print.

Image: davidwilson1949, via Flickr