ONLINE GIANT EXPEDIA stands accused in a new lawsuit filed in Seattle, Washington, of overcharging hotel customers by inflating a hotel “tax and fee” on its Reservations.com site. It was the latest in a series of lawsuits against the OTA making similar accusations, including one filed in North Carolina in March.
The most recent suit was filed in U.S. District Court for the Western District of Washington at Seattle by law firm Hagens Berman on behalf of a man named Joseph Church and other consumers “similarly situated.” It states that Reservation.com gets its room inventory from Expedia, which contracts with hotels for the right to book its rooms at rates Expedia sets.
When consumers book a room on Reservations.com, they pay a $14.99 service fee, which is not disputed in the suit, and a “tax and fee” charge that is supposed to go to cover government taxes for the room. It is that latter fee that Hagens Berman says is being inflated.
In one example given in the suit, Reservations.com gave a rate of $159 for a room at the W Hotel in Seattle between Nov. 22-24 of this year, with a tax charge of $50.88.
“The real total state and local Seattle tax for a Seattle hotel room is 15.6 percent, plus $2 per night, so the total ‘Taxes & Fees’ on this room should have been $27, and not $50.88 as listed,” the lawsuit says. “On information and belief, the tax overcharge was even higher because defendants generally remit taxes only on the discounted ‘net rate’ that they pay for hotel rooms, and not on the full retail room rate consumers pay for the rooms.”
Expedia then pockets the overcharge, according to the lawsuit. Hagens Berman says in the lawsuit that Expedia’s actions violate the Racketeer Influenced and Corrupt Organizations Act. The plaintiffs seek to collect and return to consumers the overcharges.
“While Expedia takes an under-the-table cut through its deal with Reservations.com, consumers are left completely in the dark, unknowingly paying inflated costs disguised as ‘taxes and fees,’” said Steve Berman, managing partner and co-founder of Hagens Berman. “Any reasonable consumer would assume this to be a government-regulated hotel tax, and that’s exactly what Expedia has banked on and profited from, for years.”
Expedia did not respond to a request for comment on the suit.
In the North Carolina suit, 63-year-old disabled Vietnam vet Frank Moreno said an Expedia agent tried to push him into taking a hotel reservation that included a hidden $50 handling fee, according to The Charlotte Observer. Moreno said he took a trip to Charleston, South Carolina, with his wife last December, but when they arrived at the hotel they found their reservations had mistakenly been made for a month later.
Moreno went online and found rooms in a nearby hotel on Expedia for $119, but when they called to make the reservation the Expedia representative told them the rate was $150 a night. The agent pressured him to take the higher rate, saying rooms at the hotel were booking up fast, but he refused.
After hanging up, Moreno and his wife drove to the hotel and found that it still had plenty of rooms left for the posted $119 a night. The hotel manager told the couple that Expedia adds a booking fee.
The attorney representing Expedia in that suit did not respond to the Observer’s request for comment. Moreno is representing himself in the suit, and told the observer it’s not about the money.
“I don’t care that it was only $50,” Moreno said. “I don’t care that they are a big corporation. They need to be taught a lesson.”