What to do if an airline bumps you from an overbooked flight

• Being denied boarding, otherwise known as "bumping," happens when airlines oversell a flight.
• If you're involuntarily bumped from an oversold flight, you may be entitled to compensation.

Getting bumped from a flight can either be an easy way to make some cash ($10,000 in one rare case) or a nightmare scenario that ruins your vacation.

Either way, there are a few things you should know if you're bumped from an oversold flight.

Being denied boarding from a flight, otherwise known as "bumping," happens when airlines overbook a flight, meaning there are more passengers than available seats. If this happens, airlines are required to ask for volunteers to take a different flight in exchange for compensation, according to the US Department of Transportation.

This is where the prisoner's dilemma of bumping kicks in. According to the DOT, there is no limit to the amount of money or vouchers that airlines can offer up as compensation, and passengers are allowed to negotiate with the airlines. But, if you wait too long to volunteer in hopes that the airline will up the ante, other passengers might take your spot.

If you accept the airline's compensation to give up your seat and take a later flight, the DOT recommends asking these questions to make sure you're aware of any restrictions:

• When is the next flight on which the airline can confirm your seat? Can you be put on standby?
• Will the airline provide other amenities such as free meals, a hotel room, transfers between the hotel and the airport, and a phone card?
• How long is the ticket or voucher good for? Is the ticket or voucher unusable during holiday periods? Can it be used for international flights?

If not enough volunteers raise their hands, the airline will involuntarily bump people, which most of the time occurs before the plane is boarded.

In this case, airlines must provide compensation for bumped passengers, albeit with a few exceptions, according to the DOT. The exceptions include:

• Aircraft change to a smaller plane due to operational or safety reasons
• The plane holds fewer than 30 people
• Weight and balance concerns for planes with 60 or fewer seats
• The flight is departing from a foreign country and headed to the US

If none of these apply and you have a confirmed ticket, you checked in on time, you were at the gate on time, and the airline could not get you to your final destination within an hour of your original arrival time, then you are entitled to denied boarding compensation, or DBC, the Transportation Department says.

When you're entitled to compensation — and how much

The DBC is based on the value of your ticket, the length of your delay that resulted from the involuntarily denied boarding, and if your flight was domestic or international.

For domestic flights that arrive one to two hours later than scheduled, passengers receive 200% of their one-way fare, which can be capped at $775. Anything over two hours is 400%, which can be capped at $1,550.

For international flights that arrive one to four hours later than scheduled, passengers receive 200% of their one-way fare, and anything over four hours is 400%. The caps still apply, which is up to the discretion of the airline.

Passengers who booked a higher-fare class, like business, but were downgraded to a cheaper cabin must be given a refund for the difference in price.

How to lower the odds of getting bumped from a flight

There's nothing you can do to guarantee you won't get bumped from an overbooked flight, as one traveler who said he was bumped off an American Airlines flight learned the hard way.

But there are some things you can do to decrease your odds of getting bumped, such as buying higher-class seats, checking in on time, and having frequent-flyer status.

According to the DOT, an airline may deny you a seat based on whatever criteria it has established, "such as the passenger's check-in time, the fare paid by the passenger, or the passenger's frequent flyer status."

"However, the criteria cannot subject a passenger to any unjust or unreasonable prejudice or disadvantage," the agency notes. "For example, an airline could not lawfully use a passenger's race or ethnicity as a criterion."