Utah-based third-party hotel room resellers have settled Federal Trade Commission (FTC) charges that they misled consumers through ads, webpages, and call centers that led consumers to mistakenly believe they were reserving the rooms directly from hotels. The resellers failed to adequately tell consumers that their credit cards would be charged immediately, rather than after they arrived at the hotel. The settlement prohibits the company—Reservation Counter, LLC—from misrepresenting its affiliation with hotels and restricts how the company can use hotel names and logos in advertising, search engines, and URLs.
The American Hotel & Lodging Association (AHLA) said that the announcement comes after two years of intense work, and sets an important precedent as the industry continues its campaign to rein in deceptive and misleading marketing practices that prey on unsuspecting travelers.
Reservation Counter, LLC and its two parent companies, Partner Fusion, Inc. and TravelPASS Group, LLC, sell hotel room reservations 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 result from search engine ads, which appear in response to consumers’ online searches for hotels. When consumers click on the link in one of the defendants’ ads, they are sent to webpages owned by Reservation Counter and its parent companies that feature information about the hotel searched. Consumers can book rooms online or by calling the phone number listed in the companies’ ads and webpages and speaking with sales agents at call centers controlled by the defendants.
According to the FTC’s complaint, the ads, webpages, and call centers create the impression that consumers are booking rooms directly with the advertised hotel when in fact, they are booking rooms through the defendants. According to the complaint, consumers who book through the 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 as when booking directly from the hotel.
When booking hotel rooms through the defendants, consumers must provide credit card or other payment information. In many instances, consumers are charged immediately for the cost of the hotel room, plus applicable fees and taxes, rather than after arriving at the hotel. According to the complaint, consumers are not adequately informed that they will be charged immediately.
The proposed order settling the FTC’s charges prohibits Reservation Counter and its parent companies from making misrepresentations about their affiliation with hotels. The order also prohibits the companies from using a hotel name or logo in any search engine ad, URL, website, webpage, or any other type of advertising in a misleading way. It also bars them from placing their telephone number directly near a hotel name, logo, or address in a manner that misrepresents that callers would be contacting the hotel directly.
In addition, the order requires the 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 also requires the companies to disclose that callers to any of their hotel reservation call centers have reached an independent, third-party travel agency and to monitor their call centers to prevent misrepresentations.
The Commission vote authorizing the staff to file the complaint and proposed stipulated final order was 2-0. They were filed in the U.S. District Court for the District of Utah, Central Division. The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders or injunctions, etc. have the force of law when approved and signed by the District Court judge.
The FTC said that this case is part of the agency’s ongoing efforts to ensure consumers receive accurate information in connection with booking hotels so they can make informed choices.
