Overselling is deliberate. Airlines sell more seats than the aircraft has because a predictable share of passengers never turn up, and the rules do not forbid it; they price it. That is the useful way to read the US denied-boarding provision, because unlike the UK figure it is not a flat sum at all. It is a formula with two inputs, your fare and how much later the airline gets you there, and a ceiling that stops it running away on an expensive ticket.
The formula, in the regulation's own terms
The US rule works in tiers keyed to the arrival time of whatever the airline puts you on instead, measured against the planned arrival of the flight you were refused. Arrive within an hour of the original plan and no compensation is required at all. Arrive more than one hour but less than two hours late and the payment is at least two hundred percent of the fare to your destination or first stopover, subject to a cash ceiling. Beyond that the multiplier doubles, with a correspondingly higher ceiling. The regulation states the ceilings as figures, and this site quotes them with the section and the date they were read rather than repeating a number from a summary.
Why the fare matters here and not in the United Kingdom
The two schemes have opposite instincts. The retained UK Regulation pays by distance, on the view that the inconvenience of being left behind is roughly the same whatever you paid, so a bargain fare and a full flexible fare on the same route are worth the same. The US rule pays by fare, on the view that the airline should hand back a multiple of what it took. In practice that means a cheap domestic ticket produces a modest US payment and a long expensive one hits the ceiling, and the same passenger on the same disruption can be worth very different amounts depending on which airport they were standing in.
The exceptions are about the passenger and the aircraft, not the weather
The exceptions to the US entitlement do not include anything resembling the European extraordinary-circumstances defence. They concern whether the passenger met the carrier's check-in deadline, whether comparable transport was offered that arrives promptly enough, and whether a smaller aircraft was substituted for operational or safety reasons. This matters because a passenger arguing about a storm has picked the wrong argument: overselling is not weather, and the questions the rule actually asks are all answerable from your own boarding documents.
Getting it paid, and what the airline must tell you
A carrier must advise a passenger it solicits to volunteer whether they are in danger of being denied boarding involuntarily and, if so, what compensation it would owe. It must also give a written explanation of denied boarding compensation and its boarding priority rules. Ask for both. If a payment is refused or the amount looks wrong, the complaint route is the carrier's own designated department, and the rules require it to acknowledge a written complaint within thirty days and to answer it substantively within sixty.
Questions people ask about overbooked flight compensation
How is compensation for overbooked flight seats calculated in the US?
As a multiple of the fare to your destination or first stopover, set by how late the substitute arrives, and capped at a cash ceiling stated in the regulation. No compensation is required at all if the alternative gets you there within an hour of the original plan.
Is flight overbooked compensation the same in the UK?
No. The retained Regulation pays a fixed sum banded by flight distance and ignores the ticket price entirely, and it is payable immediately at the airport rather than calculated afterwards.
Is it legal for an airline to oversell?
Yes, and both schemes assume it happens. What they regulate is the order of events: volunteers must be asked for first, and a passenger refused a seat against their will has an entitlement that does not depend on the airline's reason for overselling.
Do I have to accept the airline's rebooking to get paid?
The US payment is calculated from the alternative transport the carrier offers, so what it offers changes the tier. Declining it does not create a larger entitlement; the tiers are measured against what was offered at the time the arrangement was made.