Qantas and Virgin Australia are at the forefront of one of the biggest debit card mail outs in history. Frequent flyers – as young as 16 year olds, are eligible for Master cards and Visa cards. The pre-paid and debit cards were sent out to 12 million individuals for being part of the frequent flyer program.

Although these cards are pre-paid and not tied to any credit account, Nathan Lynch, Thomson Reuters’ Head Regulatory Analyst pointed out that this could be a violation of consumer protection laws. But this is very unlikely, as the Australian Securities and Investments Commission (ASIC) have issued a “no action” letter that allows the airlines to avoid legal action.

Frequent flyers as young as 16 years old can avail of the cards by opting in on the frequent flyer program. But it was later found out that due to the low turnout, Qantas Cash cards were mailed out to 9.4 million eligible members. Virgin meanwhile sent out 3.7 million Visa cards to its members.

Both Qantas and Virgin Australia refer to these mailed out cards as an “enhanced” loyalty card. But questions whether these cards were capable of credit surfaced after a user spent all her funds and went into overdraft after all charges were applied. The airlines have yet to comment on this situation.

Read more about this on the Sydney Morning Herald website.