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Legislation Introduced to Combat Online Hotel Booking Scams

Legislation Introduced to Combat Online Hotel Booking Scams

On Wednesday, a group of bipartisan Senate and House leaders introduced legislation aimed at stopping online hotel booking scams that are increasingly impacting consumers and hoteliers alike. The Stop Online Booking Scams Act was introduced by U.S. Senators Steve Daines (R-MT), Bill Nelson (D-FL), Deb Fischer (R-NE), and Amy Klobuchar (D-MN), and U.S. Representatives Ileana Ros-Lehtinen (R-FL), Lois Frankel (D-FL), and Peter Welch (D-VT). The American Hotel & Lodging Association (AHLA) recognized and applauded the bill during its annual Legislative Action Summit in Washington, D.C., taking place from May 17-18 in partnership with the Asian American Hotel Owners Association (AAHOA).

Two years ago, 6 percent of American travelers reported having booked on a website that they first believed was a hotel’s official website, and later discovered was in fact fraudulent. The number of American travelers reporting that experience has since risen to 22 percent, according to research cited by AHLA. The Federal Trade Commission, the Better Business Bureau, AAA, and various other consumer advocacy groups have issued strong warnings about these scams.

The problem is one that Montana-based hotelier Steve Warhilch has experienced both as a consumer and as an operator of two hotels—one in Billings, Montana and a second in Redding, California. While preparing for his travels, Warhilch says that he often has to click on several properties until he finds a hotel’s official site. The scams, he explains, use vague language and designs that mimic legitimate hotel websites to lead consumers astray. It’s an issue that’s just as frustrating to hoteliers as it is to their guests, Warhilch says.

“What happens is that people book with either a fictitious OTA or they book on an unauthorized site, and say, ‘I booked directly with you,’ when they didn’t. They become upset,” Warhilch says. He added that the confusion can leave guests with a negative impression of the hotel’s brand. “From an operator’s standpoint, that’s the importance of this bill—to prevent this from happening. This legislation helps consumers understand who they’re booking with and where they’re making a reservation.”

If enacted, the Stop Online Booking Scams Act will provide safeguards and take corrective action to stop scammers from using deceptive tactics and misappropriating brand identity to exploit consumers. Unaffiliated third-party booking sites will need to disclose that they are not affiliated with the hotel before any consumer’s credit card is charged, whether by including conspicuous language throughout the transaction or by adding a prominent display of the seller’s brand identity. Failure to comply with the third-party disclosure requirements would be considered an unfair or deceptive act under the Federal Trade Commission Act, and state attorney generals would have the authority to bring a civil action against companies who violate the provision.

“In today’s digital age, consumers rely on the comfort and ease of online hotel bookings and they should always have the utmost confidence in the online booking process,” Katherine Lugar, president and CEO of AHLA, says. “Unfortunately, with online travel bookings surging over the past several years, averaging 500 hotel bookings per minute, so has the rate of scams. Too many consumers have been duped by these bait and switch websites, and this legislation sends a clear message that this kind of deceptive behavior will not be tolerated. As the digital marketplace continues to grow and evolve, the lodging industry puts guests first and works to ensure there is ample transparency, consumer choice, and confidence as they book hotel reservations.”

Lugar adds, “We applaud the leadership of Senators Daines, Nelson, Fischer and Klobuchar, as well as Representatives Ros-Lehtinen, Frankel, and Welch for taking appropriate steps to protect consumers from these scams and look forward to working with them and their colleagues to move this important legislation through the legislative process in both chambers of Congress.”

Urging lawmakers to protect consumers from online booking scams is one of several actions on the agenda for nearly 500 hoteliers who are this week convening on Capitol Hill from across the country for AHLA’s two-day legislative action summit. Warhilch is one of those hoteliers. One year ago during AHLA’s 2016 legislative action summit, he shared his story with his representative and now co-sponsor of the Stop Online Booking Scams Act, Sen. Daines.

“Politics doesn’t happen overnight,” Warhilch says. “From talking to Sen. Daines 12 months ago, having him do his research and come to Montana to talk to a variety of hotel owners, seeing him back the bill and prepare it, and then introduce it—that process is really neat. Montana’s a small state, so it just goes to show what one person or a group of people can do. We still have a ways to go, but we made a difference and we’re starting to raise awareness among consumers to stop this from happening to more people.”

2 comments

  1. Let me see if I get this right. The industry is claiming that customers get upset when they book a hotel reservation with a fictitious OTA or an unauthorized site, and it thinks that this will not happen if the federal government passes this bill? It would seem to me that if the customer books a hotel reservation on one of these sites, it is because someone is trying to steal their credit card information and this bill would not stop that at all. All this bill is going to do is make legitimate sites do something that they already do. It takes state and federal governments months and sometimes years to build a case against anyone and by then the crooks have already moved on to something else.

  2. The bogus sites aren’t primarily being used to steal credit card info, it’s to take 15-20% commissions from the hotel properties. The fake sites pass the reservations through the OTAs…..the OTAs call these sites “affiliates”.

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