Protecting consumers from getting tripped up by hotel booking sites

E-commerce and online hotel booking sites are now the norm for consumers looking to make their business and personal travel arrangements. In fact, a third of all spending on travel – to the tune of $145 billion – goes through online booking. But that convenience has masked a marketplace full of scams, rogue vendors, false advertising and consumer abuses.

And it’s time for Washington to take action.

{mosads}This week a panel of hotel industry leaders will meet on Capitol Hill to discuss how Congress and the FTC can work to protect consumers from these deceptive practices, as well as policy issues surrounding e-commerce and travel in the hotel industry.

As the FTC has recognized in the past, deceptive advertising exposes consumers to significant harm through financial loss and other inconveniences. That’s true in the online hotel marketplace too. The combination of unfair and misleading practices is significantly costing consumers nationwide: upwards of $228 million a year.

Here’s how: consumers are deceived into booking on third party websites that are purporting to be the hotels themselves. These third party sites often use the a hotel’s name as part of the URL, a cunning and confusing tactic which leads consumers into thinking the site is owned and operated directly by a hotel. Usually these ads include a toll-free number and/or a ‘call now’ button, neither of which are affiliated with, or connected to, the brand or hotel. That means you may not be getting what you pay for, whether it’s losing your loyalty points or not getting access to the room you requested, especially if you need an accessible room for the disabled.

Enter mobile devices: for the 10 to 15 percent of e-commerce traffic that route through mobile devices, these dubious tactics are even easier to implement. Smaller screen sizes make it more difficult to recognize phony URL addresses and 1-800 numbers that look like the hotel’s reservation desk—not the third party.

Additionally, vendors will often use false strike-through pricing, misleading the consumer into believing they are charging the lowest available price, when it’s actually more expensive than the price offered directly through the hotel. Consumers may also be charged a “booking fee,” and are unable to cancel or change their reservation without being aware that this is the case until they need to make a change (not having the benefit of the hotel’s customer service policies).

Another thing to consider when booking through a third party: where are consumers’ credit card and personal information stored? Who is responsible for keeping this information secure?

One easy solution to keep consumers from getting tripped up is to book your travel directly with the hotel. It’s easier than ever and you can have peace of mind that you’ll get exactly what you paid for directly from the source.

But when it comes to the law, it’s very clear; businesses should not be misleading consumers about who they are and what they are selling. This problem needs to be fixed. The FTC has the jurisdiction and the duty to investigate deceptive advertising that harms consumers.

Consumers demand transparency from businesses and the assurance that their privacy is protected. The time for greater legislative oversight and awareness of this issue is now.

Lugar is president and chief executive officer of the American Hotel & Lodging Association.