Resort Fees: It is not just the FTC. Now there are 47 Attorneys General focused going after perceived abuses of Resort Fees
Consumer complaints have been protesting Resort Fees for almost two decades. In 2012, the FTC took its first major action. The hotel industry took some action, but many consumer groups and regulators apparently don’t think it is enough.
In May 2016, a national investigation was initiated by the Attorneys General of 46 states and the District of Columbia as to whether DC’s consumer Protection Procedures Act (the “CPPA”) and similar acts of other states have been violated by deceptive price advertising techniques related to drip pricing regarding Resort Fees.
On June 7, 2017, the Attorney General for the District of Columbia (joined by the other 46 states) filed an action against Marriott to enforce subpoenas related to this investigation, and we are now aware that a number of owners, operators, and brands are receiving subpoenas or inquiries from other State Attorneys General relating to this task force’s nationwide investigation.
The rhetoric in the papers filed by the DC Attorney Generals is predictable: The FTC issued warnings about drip pricing in the hotel industry in 2012. Despite national criticism of the practice and consumer complaints, it appears the practices have continued.
Click here to read the papers in the lawsuit in DC v Marriott filed June 7, 2017.
What is your action plan for compliance and defense of Resort Fee litigation?
If you don’t have an action plan now, you should get started before you are served with a subpoena or complaint. We expect a flurry in the near future and are already assisting clients in dealing with a broad range of Resort Fee strategies and assessments.
Why do something NOW? Here is why. This is serious!
When law enforcement focuses on a particular industry practice, it can be an unnerving, complex and very costly experience. Local, State and Federal law enforcement have extensive tools to investigate, enforce, and prosecute a host of complicated consumer protection, unfair business practices, deceptive trade practices, false advertising and fraud statutes. State laws can vary considerably and have a broad spectrum of available relief including civil and criminal penalties, injunctions, restitution, attorney’s fees and costs, and damages — all depending upon a wide variety of qualifying limitations and factors.
When confronted with an investigation, often preceded by a subpoena, it requires a careful review of the pertinent State laws and any of the overlapping Federal laws, like the Federal Trade Commission Act. Complicating matters is the cross-jurisdictional nature of such investigations (like task forces composed of various state Attorneys General) and the impacts that government intervention can have on businesses and on the principals of those businesses. Government involvement raises the profile of the issues being investigated and often encourages private lawsuits including class action lawsuits and negative publicity. Some state statutes have certain limitations on private actions, and sorting out those issues at the outset of government investigation is essential in evaluating potential exposure. The implications on a particular business of a government investigation cannot be understated and responses to law enforcement inquiries have to be thoughtful and carefully handled.