Online travel agency FlightHub Group entered into a $300,000 settlement 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 Act, prohibit "unfair or deceptive" practices. The DOT also enforces specific rules applicable to the advertising of air travel, such as its full fair advertising rule, which requires that, when advertising a price, the airline or travel agency must give the "entire price to be paid by the customer."
Here, the DOT alleged that banner advertising for FlightHub's "JustFly" brand promoted airfares that were not actually available to be booked 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 initially advertised in the banner." The DOT charged that this practice violated DOT's requirements, since, JustFly "failed to ensure that a reasonable number of fares were available at the time banner advertisements were made, advertising a fare that was no longer available, therefore failing to display the entire price to be paid for air transportation." The DOT noted that JustFly has since added the language, "fares found yesterday," to its banners (which presumably signals that the DOT is satisfied that this wording addresses its concerns).
The DOT also alleged that JustFly falsely advertised "phone-only fares" as the cheapest fare 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 fare advertised was limited and offered air transportation at a higher price."
In addition, the DOT alleged that JustFly advertised "free cancellations" and "free 24 hour cancellation" above itineraries before purchase. The DOT charged, however, that some customers were, in fact, charged for cancellation. The DOT indicated that these claims were not modified by a disclaimer -- which popped up when hovering the cursor over the claim -- which disclosed that cancellation fees actually do apply.
What are some important takeaways here?
First, for marketers of air travel, this enforcement action is certainly a good reminder not only of the DOT's full fare advertising rule, but of the DOT's expectation that marketers should not promote fares unless a "reasonable number" of them are available.
Second, for all marketers, this case highlights the importance of ensuring the proper use of disclaimers Disclaimers are never going to help you if they directly contradict the claim being made. In other words, no regulator is ever going to agree that you can advertise "free cancellation" and then include a disclaimer that says it's not actually free and cancellation charges apply. In addition, disclaimers should be clear and conspicuous. That means that they'll be easily seen, read, and understood by consumers. When a disclaimer is something you have to search for, or if it's something you only see if you take a specific action (such as by clicking or scrolling), it's much less likely that it will be effective.
And, finally, it's interesting to note how the issues the DOT were concerned about here are so closely aligned with the concerns that other government agencies have been expressing recently. For example, just days ago the FTC highlighted its concern about bait and switch advertising. And, the New York Attorney General's Office just entered into a settlement with another online travel agency over its alleged deceptive sales tactics. While sometimes regulators will take marketers by surprise, it's very often the case that they are pretty clear about their enforcement priorities. So, if you follow what they are doing (subscribing to this blog can help!), it should should help you address issues before they become the subject of the next big enforcement action.