Southwest Airlines offered a 50% fare sales this weekend celebrating being the first airline to reach 3 million likes on Facebook, but that promotion backfired when a software glitch caused customers to be billed multiple times – sometimes more than 20 times – for the air fares.  Naturally, this generated a fire storm of comments on social media, and embarrassment for Southwest, which has today begun the refund process.

Will this cause a pull back from folks using Facebook promotions and cause a further decline in Facebook stock, already hit with the revelation that millions of its accounts (and I’m guilty as well – but you’ll have to search hard to find my pseudonym) are phony, often for family pets.  A major failure can quickly lead to mistrust of a site, and its promotions.  And of course, Tweets like “Still waiting to see a DIME of the $19,704 that you stole” don’t instill a lot of confidence in either Southwest or its new distribution channel for promotions.

Of course, folks who use debit cards and like to pay cash for items were the hardest hit, and the unauthorized charges for multiple air fares caused overdrafts, and the inability to pull money from ones account.  Southwest will be paying a lot of overdraft fees as a result of the software problem, which at $35 apiece could really add up when an account is hit for 20 air fare charges.  Just think about going to the ATM and seeing a negative balance in five figures for your checking account — wonder if anyone had a heart attack as a result.

There is a lesson here.  Anything can happen with computers and the financial system.  Have some extra cash at home, hidden away for emergencies.  And also open a second checking account at another bank (as the same bank can freeze multiple accounts to cover high negative balances) to ensure that if something like this happens to one account, you still have access to cash and can buy groceries and gas until the problem is straightened out, which typically takes a few days.   And services like PayPal, which do not release your account information, and are accepted by many airlines, provide a secure yet confidential mechanism for payment that may avoid these types of problems.

While the on-line world is wonderful and brings the world to our fingertips, it remains only as good as the software underlying it.  Somebody at Southwest blew it big time, and has created a major crisis in confidence for the airline.  It will be interesting to watch how Southwest reacts to the problems on social media, which was the genesis of the promotion that caused the difficulties.


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