United States: Online travel agency reaches $300,000 settlement with DOT over false ads
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Online travel agency FlightHub Group has reached a $300,000 deal regulation with the U.S. Department of Transportation, resolving allegations that the company misled consumers when marketing air travel.
The DOT enforces its own consumer protection laws which, like the FTC law, to prohibit “unfair or deceptive” practices. The DOT also enforces specific rules applicable to air travel advertising, such as its comprehensive fair advertising rulewhich requires that, when advertising a price, the airline or travel agency indicates “the full price to be paid by the customer”.
Here, the DOT alleged that banner ads for FlightHub’s “JustFly” brand promoted airfares that were not actually available to book on the JustFly website at the advertised price. The DOT alleged that when consumers clicked on the banner ad, “the ‘cheapest fare’ available for the advertised trip could be 30% more expensive than originally advertised in the banner.” The DOT accused this practice of violating DOT requirements because JustFly “failed to ensure that a reasonable number of fares were available at the time the banner ads were made, advertising a fare that was no longer available, thus not displaying the total price to be paid for airfare. The DOT noted that JustFly has since added the language “fares found yesterday” to its banners (which presumably signals that the DOT is convinced that this wording address their concerns).
The DOT also alleged that JustFly falsely advertised “telephone-only rates” as the cheapest rate in a potential customer’s search results, along with statements such as “Only 2 tickets left at this price! ” The DOT said that when customers called, however, “JustFly.com representatives sometimes told callers that the advertised rate was limited and offered airfare at a higher price.”
Additionally, the DOT alleged that JustFly advertised “free cancellations” and “free 24-hour cancellation” above routes before purchase. The DOT, however, accused some customers of actually being charged for cancellation. The DOT said these claims were unaffected by a disclaimer — which appeared when the cursor hovered over the claim — which revealed that a cancellation fee actually applied.
What are the important takeaways here?
First, for air travel merchants, this enforcement action is certainly a good reminder not only of DOT’s full fare advertising rule, but of DOT’s expectation that merchants should not promote fares at unless a “reasonable number” of them are available.
Second, for all marketers out there, this case highlights the importance of ensuring the proper use of disclaimers. Disclaimers will never help you if they directly contradict the claim made. In other words, no regulator will ever accept that you can advertise a “free cancellation” and then include a disclaimer that it’s not actually free and that cancellation fees apply. Also, disclaimers should be clear and visible. This means that they will be easily seen, read and understood by consumers. When a disclaimer is something you need to look for, or it’s something you only see if you perform a specific action (like clicking or scrolling), it’s much less likely to be effective.
And, finally, it is interesting to note how the issues that concern the DOT here are so closely aligned with the concerns that other government agencies have expressed recently. For example, just days ago the FTC raised concerns about bait and switch advertising. And the New York Attorney General’s office has just reached a settlement with another online travel company over its alleged deceptive sales tactics. Although regulators sometimes take marketers by surprise, very often they are quite clear about their enforcement priorities. So if you follow what they do (by subscribing to this Blog can help you!), it should help you resolve issues before they get to the next big enforcement action.
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