Agencies mimicked hotel websites, charged bookings upfront 

Hotel Spoof

Reservation Counter and its parent companies had a good thing going, according to the Federal Trade Commission’s (FTC) recent complaint.

The companies, which ran websites with names like ReservationCounter.com, ReservationDesk.com and Reservation-Desk.com, sold hotel room reservations to consumers. Their hotel inventory was primarily derived from affiliate marketing relationships with more familiar online travel agencies – think Expedia or Orbitz.

The reservation companies were masters at sleight of hand internet marketing, according to the FTC, attracting customers mostly through search engine ads that were designed to give the impression that the user was clicking through to the actual hotel. To this end, the companies allegedly developed URL naming conventions that gave the impression that the customer was directly contacting a specific hotel. Once the user clicked through, he or she would arrive at a cunningly designed microsite that mimicked the look and feel of the actual hotel’s website. Consumers who booked through these sites, as opposed to booking directly with the hotel, were not eligible to receive loyalty reward points, and could not take advantage of payment and cancellation policies that would have been available had they booked the reservation with the hotel.

Hard-Charging

Things got trickier when it came to charge policies. The defendants charged consumers fees for the hotel room, fees for their services and fees owed to the original online travel agency.

But in a departure from normal hotel booking practice, the reservation companies allegedly charged customers for the full amount of the booking immediately. Most hotels take a customer’s payment information at the time of booking but hold off initiating the charge until the guest’s arrival. According to the FTC, the reservation companies flouted this convention.

What’s more, they often did not disclose their approach. There might be no mention of the direct and immediate charge at all; or, if it was mentioned, the disclosure might be hidden in a seemingly unrelated section of the microsite where the hotel was booked, such as in paragraphs about dining at the hotel.

The Takeaway

The order requires the reservation companies to cease misrepresenting their affiliation with the hotels, and to banish hotel names, logos and phone numbers from their online materials.

Additionally, workers at the companies’ Central American call centers will be required to disclose that they are employed by a third-party reservation agency – and to disclose the actual price of the booking and when it will be charged.