It is fair for airlines, and indeed, any company to refuse service, but overbooking is not refusing service. Rather, it is accepting the burden of service for more customers than is possible, then, if not to the letter of the law, than to the spirit, violating the agreement for some customers, not for a valid reason, such as intolerable behaviour, but because up to 100% of the customers show up, to fulfill their side of the contract, and the airline cannot possibly fulfill their side of the contract. In essence, the airline is dealing in bad faith, and there are many precedents for litigation against businesses that deal in bad faith. Pay for a ticket, and fail to show up on time or at all, or cancel within a reasonable period of time? Seat's empty, plane's lighter of one or more people with their luggage, and the airline, having no ability to resell the seat, keeps all your money.