Hotels: Permitted to lie about room rates by FTC

I really don’t want to sugar-coat the current growing trend of hotels being permitted to lie about room rates. This is a basic truth-in-advertising question. And, so far, hotels are getting away with lying, unvarnished fibbing, calculated deception, and double-dealing.

The Federal Trade Commission (FTC) charged with policing misleading and deceptive advertising is simply not doing its job. After almost four years of “law enforcement” work that commenced with a letter to hotel chains and online travel agencies, the false room rates are growing. Hotels are being permitted to lie.

What was once only found in the gaming hotels of Las Vegas has spread to Hawaii and Florida. The practice of lying about hotel room rates is spreading across the country and dishonest advertisers are being permitted to drive honest advertisers out of business or forcing them to begin lying in self defense.

Here’s how it works:

A consumer sees an ad in the newspaper that states, “Hotel rooms only $100 a night!”

They go to the hotel website and find the room with the $100 rate and then click on the type of room that they want.

The next screen opens, and then another, and, sometimes, yet another. Sometime in this sequence, consumers learn that there is a mandatory $30 “resort fee.” There is no way to avoid paying the fee. It is mandatory.

So, the true cost of the room should be advertised as $130. But, hotels are getting away with advertising a room rate of $100 and then, later, adding on another $30 a night. (Sometimes these “resort fees” are far more expensive.)

A game of “disclosure”
Hotels are playing a game of disclosure. They claim that when all is said and done and the transaction is complete, they are not lying if they tell consumers the full price prior to purchase. So far, the FTC seems to have been agreeing with the hotels.

Although the first price advertised is a basic lie, the FTC apparently has agreed that it is not such a big lie. Hotels need to disclose the real price just before a consumer pushes the “BUY” button. This will make up for the initial dishonesty.

So, according to our advertising watchdog, a hotel that advertises a room for $100/night when the hotel is actually charging $130/night, is allowed to lie in the initial listing. This means that consumers cannot trust any price listing of hotel room rates if the FTC allows the hotels to change the prices after the initial offer.

Using the same logic, the FTC would allow a hotel to advertise its room rates as $30/night and later “disclose” an additional resort fee of $100/night. Since, prior to purchasing, the consumer was informed of the additional $100 charge, all is according to the current FTC interpretation of what constitutes false advertising.

Finally, by extending this FTC logic, why can’t hotels simply claim all rooms are being sold for a penny a room? Of course, the hotel would “disclose,” prior to purchase, that there is an additional mandatory hotel fee of $129.99/night.

It is easy to see how these truth in advertising examples are ludicrous. The hotels are being permitted to lie. The FTC is not fulfilling its mandate to police truth in advertising.

Unfortunately, that is the state of truth-in-advertising enforcement today.

Here’s what is happening to bring back truth
Travelers United, for the past four years, has been working to change this interpretation of “truth.” It appears that, finally, the FTC may be ready to open a dictionary and match the definition to the law. However, the Hotel and Lodging Association and the American Gaming Association are gearing up to try to change the definition of “truth” in Congress.

I’m betting that Congress won’t bite, but the very fact that these giant hotel associations have not agreed with the dictionary definition of truth is troubling.

The Travelers United actions, assisted by both National Consumer League and the Business Travel Coalition, have changed the discussions in DC. The FTC appears to be ready to define truth in advertising to emphasize “truth.” Travelers United has worked across federal legislative and regulatory worlds.

A bill has been introduced into the Senate that will require hotels to include any mandatory hotel fees in the hotel room rates. And, the National Association of Attorneys General is forming a committee to stop this misleading and deceptive practice. This effort, together with the regulatory work being done with the FTC, is bringing back some truth.

The power of consumers banding together and working through the political system is showing its power. And, the hoteliers and gaming hotel operators are concerned about their ill-gotten profits.

Comparison shopping and the free market are at stake
Only with honest room rates can consumers accurately compare prices. And, only by being able to comparison-shop can the free market work.

As this debate rages over hotels being permitted to lie, remember that no matter what the big hotels claim, a lie is a lie is a lie. Telling consumers at the end of the buying process about additional mandatory fees is simply deceptive and misleading advertising. No fancy definitions of eventual “disclosure” will change the fact that a hotel room rate that does not include mandatory hotel fees is misleading, false and untruthful. It is time that hotels no longer be permitted to lie.