Airline asking for power of attourney before paying compensation

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Accepted answer

This is the official form from the EU for compensation under Regulation (EC) 261/2004.

You do not have to provide any extraneous information not specifically requested by the standard EU form however the truth is they have to verify you are who you are claiming to be somehow and hence the request for ID/Passport.

I also believe the Power of Attorney in this case is as you describe because although she may have purchased the ticket, the compensation is to go to you and you need to authorize them to pay it to/through her.

Iberia is a legitimate airline and I would not have too much problem sending them scans of your passport. From my experience with United, the information they are requesting is pretty standard.

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