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| Special price claims sometimes are misleading… |
Advertised special discounted prices of an online travel website have been challenged by the Italian competition authority (AGCM) that has jurisdiction also on misleading advertising since the claim omitted to mention that the advertised price was not inclusive, among others, of service and credit card fees and was limited to availability.
It happened to any of us to be attracted by a very good advertised price on a travel website for a flight and accommodation for our well-deserved holidays, go through all the booking process on the website, the selection of the flight and the accommodation and discover only when we are asked for our credit card details (and sometimes even later) that the price went up because of some “uncertain” costs, with even the disclaimer that additional taxes and expenses might be charged at the hotel and also finding out after the completion of the transaction that because of a pre-ticked box a travel insurance policy had been purchased. The reaction in that case might be to either be very upset with the website and give up the booking, but more often people (my wife is an expert on this!) complete the booking because additional € 50 will not change their life.
In relation to the above, European regulations on misleading advertising and unfair commercial practices are very stringent and in the case of Italy provide for fines up to € 5,000,000 which would be applicable also against a foreign website if its advertisement or platform is deemed to be also directed to Italian customers (e.g. if the website is in Italian).
And indeed the above mentioned conduct had been challenged to the Italian company of the Opodo group in 2011 where the company had been requested to change its practice. However, the Italian authority found out that despite the commitment from Opodo to comply with the order from the authority the new claims and booking process perpetrated the breach, with customers that, attracted by the advertised price for an hotel, could find out that the special prica for that hotel was not available anymore and that were able to understand the full price for the booking only at the time when credit card details were requested.
Opodo will now face a proceeding with the authority and as recently experienced in a similar case by RyanAir, the potential sanctions might be quite expensive for their business. However, the above precedents might lead to a new approach especially from online companies that so far were relying on the potentially low risk that a practice could be challenged. Also, the recent increase of the potential fines from € 500,000 to € 5,000,000 will require a more detailed review of advertising claims and a risk analysis.
As usual, if you want to discuss the above, feel free to contact me, Giulio Coraggio, to discuss. Also follow me on Twitter and become one of my friends on LinkedIn.
Image courtesy of Flickr by Alan Turkus
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