Competition & Markets Authority action on misleading sales practices – the deadline has passed. What’s changed?
This article was first written by Mark Smith, Purdy Smith – Founder and CEO for issue eight of Travel Law Today, which can be download at abta.com/travellawtoday
In the latest issue of Travel Law Today, Mark Smith, Purdy Smith – Founder and CEO discusses Competition & Markets Authority action on misleading sales practices.
In the latest update on its investigation into online hotel bookings, the Competition & Markets Authority (CMA) announced on 13 September 2019 that it has now secured changes from the majority of hotel booking websites operating in the UK.
This wider activity follows the CMA’s enforcement action against six hotel booking websites earlier this year. On 6 February 2019, the CMA disclosed that it had secured undertakings from Expedia, Booking.com, Agoda, Hotels.com, ebookers and trivago formally committing them to clean up their websites. The CMA had serious concerns that certain practices such as pressure selling, the effect commission had on the ordering of search results, inadequately substantiated discount claims and hidden charges were misleading consumers and potentially breaching consumer protection law. The CMA confirmed in its latest update that all six websites have now made the agreed changes.
However, since securing those undertakings the CMA has been working hard to ensure that the wider online accommodation booking sector is also complying with the law to ensure there is a level playing field. Twenty-five businesses, including leading brands like Airbnb, TripAdvisor and Google, as well as major hotel chains such as Accor, Hilton and Marriott, have now agreed to change how they display certain information (if necessary) and follow the CMA’s sector-wide principles for consumer law compliance.
CMA’s principles for businesses offering online accommodation booking services
The CMA’s sector-wide principles apply to any website where consumers can search for or book hotels or other short-term accommodation such as bed and breakfasts or apartment holiday lets. The principles apply both to booking sites, such as online travel agencies and metasearch engines, and websites where customers can book directly with the acommodation.
They highlight key practices that these websites need to avoid, such as failing to disclose the effect of payments on search results, the use of misleading reference prices when advertising discounts, failure to include all compulsory charges that are reasonably calculable based on the search criteria in prices that are displayed, and misleading popularity and availability statements.
Next steps in the investigation
Most of the businesses the CMA has engaged with have already made any necessary changes, though a handful of large hotel chains have asked for additional time. This is because they will need to introduce specific IT updates so that UK consumers are always shown the full cost of a room up front when looking at hotels abroad. The CMA has said it will be closely monitoring these firms to ensure that the required changes are made in a timely manner.
The CMA has made it clear that it expects all booking sites and hotel chains to comply with the sector-wide principles mentioned above. It has said that it will be watching to make sure that the major brands it has engaged with stay true to their word and will take action if it finds evidence that any websites are breaching consumer law.
Car hire investigation approach mirrored
The CMA’s approach mirrors that of its investigation into the short-term car hire sector over the last few years. It started by taking enforcement action in 2015 against Avis Budget, Enterprise, Hertz, Sixt, and Europcar – the so-called ‘big five’ – before focusing on other players in the sector such as intermediaries and price comparison websites.
Interestingly, the CMA announced on 25 March 2019 that it had recently reviewed whether the ‘big five’ were delivering on their previous commitments regarding how they display charges and other key information on their websites. It found they were still providing unclear information on some of their websites, but following further intervention the CMA is now satisfied that they are making the necessary changes to ensure that key information is displayed clearly and prominently. It will be keeping those firms under close review and has also taken separate action against two Spanish car hire companies, Centauro Rent-A-Car and Record Go, which have now agreed to include all compulsory charges up front in their prices following concerns that UK holidaymakers were being misled.
Other relevant CMA developments
The CMA also mentioned in its recent update on the online hotel bookings investigation that it will be co-leading a project on digital platforms in the travel and tourism sector under the Colombian Presidency of the International Consumer Protection and Enforcement Network.
This follows the ‘Small Print, Big Difference’ campaign, which the CMA ran in partnership with leading associations representing the holiday and travel industry in the UK, including ABTA, earlier this year. The campaign called on holiday and travel businesses to ensure that they are using fair terms and conditions in their customer contracts and being upfront and clear about charges and fees, particularly in the event of a customer cancellation.
The CMA’s broader ongoing investigations into social media influencers and fake online reviews are also clearly of significance to many businesses in the travel and tourism industry.
Evidently, there is a lot happening in the consumer law enforcement arena that is relevant to travel businesses; those operating in the sector would do well to review their practices, particularly in the online space where much of the attention is being focused.
It is also worth bearing in mind that the principles applied by the CMA in its investigations into online hotel booking websites and short-term car hire, such as including all compulsory fees upfront in any pricing, could also be applied in relation to other travel products.
ABTA supports the CMA’s ‘Small Print. Big Difference’ campaign, which encourages all travel companies to check their terms are fair.
ABTA’s model terms give a strong framework for Members to ensure they have fair terms for customers at: abta.com/member-zone/running-your-business/model-documents-and-checklists.