Here are five ways mileage programs are like Ponzi schemes:

Appearance of propriety: The "con" in con game is short for confidence. And confidence is key here because Ponzi schemes play out over months and years, as money from later investors is used to create the appearance of legitimate earnings for early investors, which in turn attracts more investors.

The major carriers' stock is traded on the venerable New York Stock Exchange. They employ hundreds of thousands of workers directly, and many more through subcontractors and related businesses. Airlines' brand names are globally known and are generally assumed to be essentially upright. As a result, most consumers expect that frequent flier miles have the full faith and credit of legit companies behind them.

Lack of transparency: Bernard Madoff was famously secretive about his investment strategies and tactics, refusing to divulge any details of his trading and insisting that clients should judge him by his results. There's a similar black-box aspect to frequent flier program participation. The airlines' implicit assurance runs something like this: "If you contribute to our profitability by purchasing airline tickets and doing business with our business partners, we might reward you with a free trip. Or we might not."

Too good to be true: Ponzi schemes are, by definition, unsustainable. Eventually they collapse under the weight of promises that can never be met.

Just as Madoff owed his investors more than he could ever hope to repay, there are trillions of outstanding frequent flier miles on the airlines' books. And every year, the airlines issue more miles than consumers redeem, enlarging rather than shrinking that unfunded liability. But as anyone who has tried to cash out his miles knows, the airlines have capacity controls in place that prevent a run on award redemptions from overwhelming the airlines' capacity to fly customers for free. The airlines, in other words, are effectively issuing a currency they are under no legal obligation to honor.

Lack of oversight: While Madoff's activities were clearly illegal, he managed to avoid detection for over a decade, operating in plain sight of those charged with preventing just such misdeeds.

Loyalty programs don't so much elude regulators and law enforcement agencies as they preemptively exempt themselves from oversight. In a neat legal maneuver, the airlines in their terms and conditions have claimed for themselves the right to modify the programs howsoever they choose, whenever they choose, no matter how negative the consequences for consumers.

Benign beginnings: Neither Charles Ponzi nor Bernard Madoff started down the road to perdition with criminal intentions. Rather they eased into criminal behavior gradually, as their bad bets required ever-larger illicit countermeasures to conceal their escalating financial insolvency. Mileage programs too began on the up and up, as uncomplicated rebate schemes. The Travel Pass program of Western Airlines, for example, awarded $50 in travel certificates to passengers that flew five trips with Western. In the cases of Ponzi and Madoff, it was a combination of greed, desperation, and a lack of regulatory oversight that gave rise to criminal activity. Significantly, those same forces are in play in the case of airline mileage programs.

Where does that leave travelers?

In short, mileage programs pose a clear risk to participants. Even if the programs remain a fixture in the travel landscape, the long-term trend is decidedly negative: A frequent flier mile earned today is less valuable than a mile earned a year ago; and a mile earned a year from now will likely be less valuable than a mile earned today.

The best way to minimize that risk — short of abstaining altogether — is to redeem miles as soon as award thresholds are reached. In the language of finance: Minimize your exposure.

It's not clear that loyalty schemes are truly Ponzi schemes. The very fact that they haven't collapsed under the weight of their liabilities suggests that they're not. Still, consumers would do well to treat them as though they were.

Reach Tim Winship at questions@frequentflier.com