A proposed class action lawsuit has been filed over Alaska Airlines’ alleged practice of pushing online customers to purchase travel insurance without disclosing an “illegal kickback” the airline receives in exchange.
A proposed class action lawsuit has been filed over Alaska Airlines’ alleged practice of pushing online customers to purchase travel insurance without disclosing an “illegal kickback” the airline receives from the insurer in exchange for brokering the sale.
According to the 21-page complaint, Alaska Airlines customers who purchase plane tickets through the company’s website are presented with the option to buy a travel insurance policy purportedly provided by non-party Allianz Global Assistance. Once payment information is entered, Alaska Airlines encourages travelers to select the option, noting in bold that travel insurance is “Highly Recommended” and urging customers not to “miss out” on the offer, the suit says.
What the defendant’s website allegedly fails to mention is that Alaska Airlines receives commissions in exchange for brokering insurance sales, which the lawsuit argues amounts to an illegal kickback. The case alleges that when a customer agrees to purchase travel insurance, they pay to Allianz a sum that includes both the price of the insurance policy and an “undisclosed fee” that the insurer then kicks up to Alaska Airlines. For its part, Alaska Airlines represents the cost of the travel insurance as a “pass-through” charge despite having a financial interest in the transaction, the case argues.
In addition to alleging the airline fails to disclose the kickback to consumers, the suit further claims Alaska Airlines holds no license to even sell travel insurance. Further still, the prices offered for the defendant’s policies are “nearly twice” the cost of “comparable—if not superior—plans” available to consumers on the open market, according to the lawsuit.
“This discrepancy,” the complaint reads, “is attributable to the illegal commissions that Alaska receives from its insurers.”
The defendant is not the first airline to have been hit with a lawsuit over alleged travel insurance kickbacks.