The court also addressed plaintiffs' claim that Expedia's practice of bundling taxes and service fees was misleading and violated Washington's Consumer Protection Act because Expedia failed to disclose that the taxes it collected from consumers were based on the retail rate of the hotel reservation, rather than the wholesale rate that Expedia actually remitted to the hotel. Under Washington law, both affirmative conduct and failure to disclose material information are actionable as unfair or deceptive practices.
Expedia argued that this practice is reasonable, but the court said whether or not this practice is reasonable is a genuine issue of material fact that precludes summary judgment. However, in a footnote, the court referred to another decision in which a company's "bogus" charge was deemed deceptive and said "the court here accepts the same argument that a failure to disclose the full extent of service fees and the differences between costs and profit is a material omission."
Although this case is still in the early stages, this court's opinion suggests that web site operators should be careful (and not misleading) as to how they characterize their service fees, i.e., not say that they're just for covering costs if they include a mark-up for profit.
The decision, In re: Expedia Hotel Taxes & Fees Litigation, can be found on the Loeb & Loeb LLP web site here.