Online Travel Booking and Bidding Agencies - Expedia class action suit

Looks like they're being sued for disguising fees as taxes.

If you booked a hotel stay through Expedia and paid 'Tax Recovery Charges' and 'Service Fees' during the period from January 10, 2001 through June 11, 2008, a nationwide class action may affect your rights.
http://www.hbsslaw.com/expedia

I got an email on this earlier. I guess its legit. Hmm.

Yep, is legit. HB is a well-known consumer protection law firm.

More info from HB website:
http://classactionlawtoday.com/blogs/hbsslaw_classactionlawsuitsblog/default.aspx

Consumers are always trying to find the best deal, and there is no shortage of companies ready to help.

Take Expedia - by all regards, a well-run company that cuts deals with airlines, hotels and other travel service providers, aggregates the offers and sells them to consumers at a discount price.

But some time ago, Expedia customers saw something that made them take notice - they were paying "taxes and fees" for their travel purchases. Nothing wrong with that, right?

Well, not so fast.

According to a complaint we filed, we think Expedia is overcharging consumers. Here's how: Expedia purchases hotel rooms at a wholesale rate, which it then marks up and sells to consumers. But as part of the process, Expedia tacks on what the company calls a "tax and service fees" charge.

What consumers don't know is Expedia is on the hook to pay tax on the lower wholesale rate, not on the higher rate it charges consumers.

What's more, our suit contends that Expedia rolls the tax charge in with the service fee to mask the financial slight-of-hand. We also contend that Expedia breached its contractual promise by charging "service fees" that bear no relation to the costs of servicing a reservation, but are simply designed to offset overhead and pad the profits of each reservation.

According to court documents, there could be as many as 15 million Expedia customers that booked a hotel and paid these fees. With that many people as potential class members, and hundreds of dollars spent on each booking - if you do the math, it adds up to a lot of zeros.

Since we've filed the case, Expedia has been fighting it, as one might expect. Earlier this month, the Court of Appeals denied a motion by Expedia to overturn the trial court's order making this a nationwide class-action.

With that out of the way, we are looking forward to represent Expedia customers in court soon. It's no vacation, but it beats unjust taxation without remuneration.

Stay tuned for more developments, or visit our site to learn more.

once they get their lawyer fees, i'm sure they'll be able to take a very nice vacation.

The City of Columbus, Georgia won a Suit Against Expedia Over Lodging Taxes; Apparently, the silly Expedia Argument was :"No Longer Listed Columbus Hotels on its Web Site :

http://www.hotel-online.com/News/PR2008_3rd/Sept08_ExpediaColumbus.html

I can't wait to get my $3 voucher for a future booking in the mail after the lawyers get done with their fees.

Although I'm a prospective class action participant, I'm not planning on joining this suit. I read over the complaint by the law firm & honestly - I don't think they're right & I have a pretty good understanding on how the wholesale travel industry works.

I guess my issue is that the crux of the complaint seems to be that Expedia isn't showing the customer the true tax amount & the true profit amount.

Let's say for example, that a customer buys a 100.00 hotel room from Expedia. Let's say that Expedia is getting that room at 80.00 and the tax rate is 10%. Expedia may charge the customer 100.00 + 15.00 in taxes/fess to cover the 88.00 - so it's net profit is 27.00. Big deal. You're the customer. You should shop around for your rates & if you have an issue spending money on taxes and fees, shop directly with the hotel rather than using a 3rd party site. That 27.00 "profit" is helping cover the costs of doing business as well as making a bit of a profit.

IMHO, this is a frivilous lawsuit. In this day & age, you as a consumer, have choices of where to go and how to book your rooms - this is a business that's here to make money...people need to understand that corporations are not a charity.

And no, I don't work for Expedia...

I can't wait to get my $3 voucher for a future booking in the mail after the lawyers get done with their fees.My thoughts exactly. The lawyers make a bundle, and the customers get scraps.

Although I'm a prospective class action participant, I'm not planning on joining this suit. I read over the complaint by the law firm & honestly - I don't think they're right & I have a pretty good understanding on how the wholesale travel industry works.

I guess my issue is that the crux of the complaint seems to be that Expedia isn't showing the customer the true tax amount & the true profit amount.

Let's say for example, that a customer buys a 100.00 hotel room from Expedia. Let's say that Expedia is getting that room at 80.00 and the tax rate is 10%. Expedia may charge the customer 100.00 + 15.00 in taxes/fess to cover the 88.00 - so it's net profit is 27.00. Big deal. You're the customer. You should shop around for your rates & if you have an issue spending money on taxes and fees, shop directly with the hotel rather than using a 3rd party site. That 27.00 "profit" is helping cover the costs of doing business as well as making a bit of a profit.

IMHO, this is a frivilous lawsuit. In this day & age, you as a consumer, have choices of where to go and how to book your rooms - this is a business that's here to make money...people need to understand that corporations are not a charity.

And no, I don't work for Expedia...

From what I understand about the case, I came to a similar conclusion. I seem to remember a few states "all of a sudden" demanding and going after the big three for taxes off the sell of hotels rooms. A superior court judge said that he didn't understand why the states wouldn't try to work something out first before just suing for the money... I'll see if I can find the article..

I predict Expedia will win the suit but will raise its fees to cover the cost of the current and future litigation.

And the fact that this law firm's website is named classactionlawtoday.com just disgusts me...

First I have heard of this actually, but I do agree it is entirely frivilous. I always shop around.

The City of Columbus, Georgia won a Suit Against Expedia Over Lodging Taxes; Apparently, the silly Expedia Argument was :"No Longer Listed Columbus Hotels on its Web Site :

http://www.hotel-online.com/News/PR2008_3rd/Sept08_ExpediaColumbus.html

First, this seems to be the opposite of what the lawyers in the first post are doing. That is, suing because Expeda is only responsible for taxes on the wholesale price, but charge customer tax on the retail price. The Columbus lawsuit states the government should get the tax on the price charged by Expedia.

Second... I think you misunderstood. Expedia is referring to the ruling that referred to FUTURE bookings in Columbus.

I believe Expedia should collect taxes based on the amount collected from customers, and remit those to the appropriate agencies. Customers should be paying the tax. The tax paid by the customer shouldn't depend on what the middleman paid. If this were true, I would be paying a lot less for WalMart stuff.

Here's a new take on the matter...there are "TWO" different objectives going on...

http://www.gutridesafier.com/press/recorder_feb07.htm

"Gutride Safier, the lead plaintiff firm before Kramer in Deaton v. Hotwire, 437631, has about a half-dozen other class actions pending against online travel agencies such as Orbitz, Travelocity and Expedia, which is run by the same company that owns Hotwire. Those suits claim the hotel booking sites bill customers for taxes and fees without making clear how those charges were calculated. For instance, they say the sites don't spell out whether they're billing taxes on a full room price or a discounted rate.

Paul Chronis, a Chicago partner at McDermott, Will & Emery who serves as defense counsel for Orbitz, Cheaptickets.com and Lodging.com, said online travel companies have recently gotten several cases dismissed on grounds such as not having exhausted other remedies.

Cases that have been dismissed, voluntarily or involuntarily, include those filed by the cities of Atlanta; Philadelphia; Bellingham, Wash.; and Miami-Dade County and Orange County, Fla., Chronis said.

Compared with the cases filed by municipal taxing authorities, Chronis said "very few" consumer cases have been filed, perhaps indicating that few consumers think the online tax and fee scheme presents a basis for litigation.

"The question is, who are they improperly diverting funds from, [consumers or local governments]?" added Los Angeles Deputy City Attorney James Colbert III. "It's a little bit difficult to think they could be guilty of both."

If the consumers win their cases, that won't necessarily close the door on the government plaintiffs' suits, Colbert added. But victories for consumers might provide ammunition for the online companies as they defend themselves against the taxing authorities."

I find the fact that InterContinental Hotels Group had something to say really suspect on their part....I'm "sure" they want to KNOW for their own purposes

Yep, is legit. HB is a well-known consumer protection law firm.

Seems like a contradiction of terms :D

once they get their lawyer fees, i'm sure they'll be able to take a very nice vacation.

The laywers? Yep, and as was said, the consumers might get a $3 voucher toward a future trip. I received a dozen or more Avis and Budget vouchers with a previous class action lawsuit. Never was able to use one.

I also agree that this is a frivolous lawsuit. One reason sites like Priceline and others went from an actual tax amount to a bundled "taxes and fees" amount was just for this reason - and I might add to the DETRIMENT of the consumer. Earlier, you could figure out what Priceline paid for the room by using the tax amount on the confirmation and the tax rate in the city you were going to. Now, with the "taxes and fees" bundled, that is no longer possible.

John

Travelocity is not selling Baltimore hotels.....

Baltimore is joining dozens of governments nationwide going to court in hopes of collecting taxes from online travel sites that help people book hotel rooms.

The lawsuit, filed in U.S. District Court on Wednesday, asks that companies like Expedia Inc., Orbitz Inc., Travelocity.com Inc. and Norwalk-based Priceline.com pay the city's 7.5 percent room tax on the markup for rates customers pay for Baltimore hotel rooms.

The city is missing out on about $1.5 million a year, Mayor Sheila Dixon said.

Welcome to FT!

I'm curious as to why you're saying that Travelocity isn't selling hotels in Baltimore, as I just looked and they've got tons of availability in downtown Baltimore, even during the week of the Presidential Inauguration.

I'm all for consumers doing their research, but I'm surprised that many posters here think that Expedia did nothing wrong. Firstly, they violated their own contractual promise in the Terms of Use agreement to only charge as much as needed to "cover the costs" of booking. They went ahead and charged extra as if they weren't getting wholesale rates, thus pumping up their profits. There is a discussion going on at Lawsuiassembly.com (http://lawsuitassembly.com/phpbb/viewtopic.php?f=10&t=278&p=295#p295) about whether Expedia really deserves to be sued, and also whether individual consumers can actually expect to get substantial restitution.

Looks like Expedia is settling. See http://www.servicefeessettlement.com/

Essentially you can get 30% in cash back on what you paid in "taxes/fees", or 65% in Expedia credit.

The Expedia credit is valid only toward Expedia Special Rate bookings (& maybe hotel + air/ car packages,) which makes it advantageous only when booking non-chain hotels! Who wants to forfeit points over this? So I am seriously thinking of grabbing the cash payment.
I remember a $3 Starwood coupon which I got from a lawsuit over Energy Surcharges &or Resort fees, which I never did use :( !

The Expedia credit is valid only toward Expedia Special Rate bookings (& maybe hotel + air/ car packages,) which makes it advantageous only when booking non-chain hotels! Who wants to forfeit points over this? So I am seriously thinking of grabbing the cash payment.


That's a good point about the hotel points. I guess it depends how big a credit you would get. If your choice is $5 cash or $10.50 credit, then taking the cash may be obvious. But if your choice is $500 cash or $1,050 credit, well, the points awarded for a $1K hotel stay aren't worth anywhere near the $550 difference.

Expedia Special Rate hotels also require pre-payment, though they may be refundable.

I do find air+hotel packages can offer huge savings, especially for last minute bookings when airfares are high.

But the deal breaker for me would likely be that the Expedia Credit expires in 1 year. Cash never expires.

So has anyone actually done this? If looks like if you are eligible and do nothing, you automatically receive the "credit" to your Expedia account. How do you determine how much cash or credit you are due? I have a "registration number" and "control number" but I don't want to enter them here
https://cert.gardencitygroup.com/eht/fs/cashElection?lang=en

because I don't know if by entering them I have obligated myself to taking the cash version.