Immediate Payment Required for Lost Bags as per the DOT?

by Adam

It’s not true that an airline has 24 hours to return that missing bag before it has to compensate you. According to the DOT, if you reach your destination and your bag doesn’t, the airline has to reimburse you on the spot for items you need immediately. If someone challenges your source, cite the Code of Federal Regulations, Title 14, Part 254. And if the bag is truly “lost” (permanently gone), rather than “delayed” (temporarily gone), the airline must also refund any baggage fees you were charged for that suitcase.

That’s a paragraph from a New Year’s message titled “Travel Secrets” that I received this week at work from American Express Travel. It seems to dispute a long held belief that US based airlines have 24 hours to return your missing bags before they have to fully compensate you, instead requiring immediate payment by the airline. I decided to do some research on Title 14, Part 254 and found the following:

On any flight segment using large aircraft, or on any flight segment that is included on the same ticket as another flight segment that uses large aircraft, an air carrier shall not limit its liability for provable direct or consequential damages resulting from the disappearance of, damage to, or delay in delivery of a passenger’s personal property, including baggage, in its custody to an amount less than $3,300 for each passenger at the time of reporting. Large aircraft means any aircraft designed to have a maximum passenger capacity of more than 60 seats.

Interesting… Airlines normally provide a small compensation payout the first day/night that you are without your luggage to help obtain any necessities that you might need for the first 24-48 hours. However, I guess you could site this DOT clause if you didn’t’ want to wait, though I foresee a lot of fighting on the airline’s part until they can confirm that your bag is actually permanently lost…especially if they are going to be paying out a significant amount.

Have you ever invoked this immediate payment clause? What happened and with which airline?

Update 1/6/14 – Thanks to reader Jim, we now have some clarification regarding the timeliness of the reimbursement and whether individual airline policies violate the spirit of the regulation. Here is the source document found by Jim –  http://airconsumer.ost.dot.gov/rules/Notice.Expense.Reimburse.final.pdf. It’s also been confirmed that AMEX Travel’s source for the newsletter was Fox News. Thanks to Reader Hua, please see Seven Travel Secrets of Experienced Fliers: http://www.foxbusiness.com/personal-finance/2013/04/10/seven-travel-secrets-experienced-fliers/.

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Schrott January 4, 2014 - 9:41 pm

My only experience with lost luggage with a US carrier was with DL and they refused point blank to pay anything at all (or even cover the cost of replacement toiletries etc) until after 72 hours!

It would be great if they could be persuaded to hand over compensation immediately, but I doubt it – DOT rules notwithstanding!

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Hua January 5, 2014 - 3:20 am

I don’t see anything cited that indicates that any immediate payment is required. The verbiage appears to prohibit carriers from setting a reimbursement of under $3,300 for the value of personal property. (I believe this may have since changed to $3,400.)

Am missing something where it states anything regarding immediate payment or specifies any requirements as far as the timing of the payment?

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adam January 5, 2014 - 6:26 am

@Hua – I believe they are referring to the section that states “at the time of reporting”

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Hua January 5, 2014 - 12:42 pm

That refers to when the liability limit of $3,300 is applied, not when the payment has to be made.

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Hua January 6, 2014 - 3:13 am

BTW, here’s the updated rule which raises the limit to $3,400 and removes “at the time of reporting”:

http://federal.eregulations.us/cfr/section/title14/chapterII/part254/sect254.4?selectdate=1/3/2014

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Jim January 6, 2014 - 8:39 am

Actually, Hua, the words “at the time of reporting” never appeared in the regulation this points to. Not the original version, not the most recent version, or any of the intermediate versions in between. This article is borderline unethical (actually, not really borderline but I’m being nice) IMO.

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adam January 6, 2014 - 8:47 am

@Jim – That’s a direct quote from our American Express Travel Services newsletter. I tend to believe they wouldn’t publish something that wasn’t taken from a reliable source.

Jim January 6, 2014 - 9:05 am

First, the article stated, “I decided to do some research on Title 14, Part 254 and found the following:” Apparently not much research was really done, since it took me all of 10 minutes to find out that those words never appeared in the regulation. Second, if it is indeed from American Express Travel Services newsletter, they obviously embellished a little and didn’t stick to the letter of the regulation. If there is some ruling or authoritative interpretation of the regulation as to why they felt it was okay to add those words, I would very much like to see it.

Hua January 6, 2014 - 12:41 pm

@Jim — You’re right… I didn’t look up the earlier versions, but upon doing so I found that “at the time of reporting” doesn’t appear.

@Adam — Do you have a link to where “at the time of reporting” was included?

Current version: http://federal.eregulations.us/cfr/section/title14/chapterII/part254/sect254.4?selectdate=1/3/2014

Prior version: http://www.gpo.gov/fdsys/pkg/CFR-2013-title14-vol4/xml/CFR-2013-title14-vol4-sec254-4.xml

If it didn’t appear somewhere, then there seems to be some embellishment in addition to optimistic misinterpretation of the purpose of 14 CFR 254.

adam January 6, 2014 - 12:46 pm

@Hua – I’ve reached out to our American Express Travel liaison who said they’d get back to me soon. Obviously, this isn’t high on their list of priorities when compared to the actual travel bookings and modifications they perform. Anyway, she was able to get me the source which was Fox News…says something in itself I guess. I asked for a link to the article and I’m waiting on that now. Will post as soon as it’s emailed to me.

Hua January 6, 2014 - 12:51 pm

This appears to be the source:

Seven Travel Secrets of Experienced Fliers: http://www.foxbusiness.com/personal-finance/2013/04/10/seven-travel-secrets-experienced-fliers/

Jim January 6, 2014 - 1:00 pm

@adam,

It appears that while the regulation was misquoted, the message may not be incorrect.

http://airconsumer.ost.dot.gov/rules/Notice.Expense.Reimburse.final.pdf

This is what I was looking for. It would be helpful if you referred to this in your article instead.

adam January 6, 2014 - 1:13 pm

@Jim, @Hua – Thanks so much for your follow-ups on this. Based on the email response, the topic really is of great interest to a lot of the readers and I can’t tell you how appreciative I am for your follow-ups. I’ll be updating the post with both of these links. Additionally, I just received a call from our AMEX representative and they’ll be sending me a PDF copy of the newsletter which I can forward on to anyone interested as well. Happy travels and hopefully you won’t need to make use of any of this info!

Dan January 5, 2014 - 6:32 am

Wow

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Anthony January 5, 2014 - 6:37 am

All that provision seems to do is invalidate provisions of ticket agreements etc. that purport to limit an airline’s liability for lost/damaged/delayed bags below $3,300. It says absolutely nothing about when payment is due. If anything, the implication is that the passenger would need to sue the airline to recover any money if there is a dispute as to (1) whether the bags were actually lost, damaged, or delayed, (2) whether the bags were in “in its custody” when the incident occurred, and (3) the amount of “provable direct or consequential damages.”

In other words, this doesn’t seem like a very consumer-friendly statute at all.

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Compensation for 4 Day Delayed Baggage? - FlyerTalk Forums January 5, 2014 - 8:36 pm

[…] Below is a link for interesting article on this subject from BoardingArea.com dealing with a DOT requirement that airlines have to reimburse you for lost items that you need immediately: http://boardingarea.com/pointmetothe…s-per-the-dot/ […]

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Neal Z January 6, 2014 - 12:34 pm

Nothing in the plain language of 14 CFR 254 requires immediate payment upon demand. Indeed, the regulation really just requires that the airlines make sure that passengers are on notice that the airline’s liability for lost, damaged, or delayed luggage is not less than $3,400.

Just because the airline can’t have a contractual term which limits their liability to less than $3,400, it does not mean that their liability, in any given situation, is $3,400. Think of it like car insurance. You may carry $100k/$300k/$50k liability limits on your policy. But if you are involved in an accident where damages are only $30k, that is all the insurance company will pay. They don’t have to pay the full $100k.

Moreover, there is a basic principle in law called “mitigation of damages.” Don’t look for the airlines to be a cash cow just because your bags came in a couple hours (or even a day) later. Are you entitled to reasonable compensation in a timely manner? You bet. But don’t expect a $3,400 check on the spot every time your luggage is a little late. Not gonna happen.

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