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Hotel Room Resellers Settle FTC Charges of Deceptive Conduct

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On December 22, 2017, the Federal Trade Commission announced that third-party hotel room resellers settled charges that they misled consumers through advertisements, webpages and call centers to mistakenly believe they were reserving rooms directly from hotels. The FTC also alleged that the resellers failed to adequately tell consumers that their credit cards would be charged immediately, rather than after they arrived at the hotel.

As set forth in the complaint, consumers that book via defendants may not be eligible to receive reward points or other hotel loyalty program benefits, and hotel policies, such as cancellation and refund policies, may not be the same.

Defendants sell hotel room reservations, or bookings, to consumers nationwide. They get hotel room inventory primarily through other online travel agencies such as Expedia, Priceline and Orbitz, and then market the rooms themselves.

Most of the defendants’ hotel bookings, as stated by the Commission, result from search engine ads, which appear in response to consumers’ online searches for hotels. When consumers click on links, they are sent to webpages that feature information about the hotel searched. Consumers can book rooms online or by calling the phone number listed in the ads and webpages, and speaking with sales agents at call centers controlled by defendants.

According to the agency, this matter is part of an ongoing effort to ensure consumers receive accurate information in connection with booking hotels so they can make informed choices.

The proposed order settling the FTC’s complaint will bar defendants from such allegedly deceptive conduct in the future and specifies changes that must be implemented to ensure consumers have information necessary to make fully informed decisions. It prohibits affiliation-based misrepresentations and the use of a hotel name or logo in any search engine ad, URL, website, webpage or any other type of advertising in a misleading way. The proposed order also restricts the placement of telephone numbers directly near a hotel name, logo or address in a manner that misrepresents that callers would be contacting the hotel directly.

In requires defendants to disclose material information, including the total cost of a hotel room and when they will charge a consumer’s payment card.

The order requires defendants to disclose that callers to any of their hotel reservation call centers have reached an independent, third-party travel agency and to monitor call center activity to prevent misrepresentations. Defendants must establish, implement, and thereafter maintain policies, practices, and procedures that are reasonably designed to ensure that sales and customer service agents at call centers do not misrepresent, directly or by implication, that callers have called an advertised or promoted hotel, or that callers are booking a room reservation directly through the hotel or an entity acting directly for the hotel.

Such policies, practices, and procedures shall include at a minimum, requiring each call center operation to enter into a written agreement that clearly and conspicuously states specified requirements, the call center’s obligation to take immediate action to correct any violations and the disciplinary action that defendants will take against the call center for failure to comply. The order also imposes call center monitoring and disciplinary requirements.

Contact an experienced advertising compliance attorney to discuss the implementation of preventative call center risk management techniques.


ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

Richard B. Newman is an advertising law and regulatory defense attorney at Hinch Newman LLP focusing on Internet marketing compliance and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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