Chuck Grassley

United States Senator from Iowa

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Grassley Urges FTC to Look into Potential Deceptive Online Hotel Room Booking Practices

May 26, 2015

WASHINGTON – Senate Judiciary Committee Chairman Chuck Grassley of Iowa is asking the Federal Trade Commission to scrutinize the tactics of disreputable third-party online hotel reservation services. Recent news reports have highlighted possible abuses and the impact they have on consumers.  For example, these services use questionable practices that lead people to believe that they are booking rooms directly with their hotel of choice. As a result, consumers may have paid more for hotel rooms or did not receive amenities or necessities they requested.

“Families work hard so they can go on relaxing trips during the summer travel season.  Being duped by illegitimate third-party online booking services is no way to start a vacation, and consumers may end up exposed to unnecessary risks or challenges. These services appear to go out of their way to pose as major hotels, even using similar branding and marketing, in an effort to confuse and mislead consumers.  Americans should have as many choices as possible when making their travel plans.  However, they should not be misled about who they are dealing with or what they are buying. The FTC should look into these shady practices and if laws are violated or consumers are harmed, these companies should be held accountable,” Grassley said.

News reports revealed that illegitimate third-party services can charge hidden booking fees that push the price of a hotel room beyond what the actual hotel would charge.  These services may also eliminate opportunities to change or cancel a reservation, which many hotels offer.  Individuals may request certain accommodations, such as a wheelchair accessible room, only to learn upon arrival that the hotel never received the request. Further, these dubious third-party online services may not have appropriate network safeguards to protect payment information collected from consumers.

A signed copy of Grassley’s letter to the FTC can be found here.  Full text of the letter is below.

May 19, 2015

VIA ELECTRONIC TRANSMISSION 
The Honorable Edith Ramirez
Chairwoman, Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580

Dear Chairwoman Ramirez:

I write to bring to your attention a matter that may fall under the purview of the Federal Trade Commission.  I have heard concerns with the practices and legitimacy of certain third party online hotel room booking services.  Recent news reports have highlighted these potentially deceptive practices and their impact on consumers across the country.  

According to these reports, consumers have found themselves inadvertently booking hotel rooms online with third-party companies that they initially believed were the official websites of well-known hotel chains.  These consumers subsequently discovered that they had provided their payment information to companies unauthorized by, and unaffiliated with, legitimate hotel chains or travel services.  It appears that many of these third-party companies may be using marketing or other strategies—such as websites with a hotel’s trademarks and imagery—designed to lead consumers to trust that they are booking directly with their hotel of choice.  

I have been made aware of other potentially problematic practices used by unauthorized third-party booking services.  Some operate “call centers” which, upon speaking with a potential customer, purport to be the official reservation service of the customer’s intended hotel of choice and require the customer to pre-pay for the reservation, making it difficult or impossible to change or cancel reservations at a later date.  Allegedly some customers have purchased reservations through a third-party service, specifically requesting a room with disability access, but arrive at their hotel only to discover that there is no record of such request.  It also has been reported that certain services have gone so far as to include a hotel chain’s name in its URL without authorization, so that even tech-savvy customers conducting due diligence believe they are booking with the hotel’s official website.  

At the very least, many consumers have found themselves frustrated in not receiving what they thought they had paid for, such as a room with particular amenities.  At worst, consumers may be providing their payment information to companies that, through the use of hidden booking fees, end up charging more than what the hotel of choice would have charged for the same room, or they may be exposing their payment information to unsecure networks.  

Considering the Commission’s role in protecting American consumers, I encourage you to look into these allegations.  If the Commission has already initiated an inquiry, I ask that you provide me with an update on its efforts.  

Sincerely,

 

Charles E. Grassley
Chairman 

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