The CMA has sent warning letters to a number of hotel booking sites, following concerns that their terms and practices may be in breach of consumer protection law.
Its key concerns are:
- Whether search results are influenced by factors that are irrelevant to the customer's requirements (e.g. amount of commission a hotel pays);
- Whether statements about the number of people looking at the same room or how many rooms are left may mislead or pressurise customers into making a quick decision;
- Whether discount claims are transparent and truthful (e.g. is the discount based on a higher price that was available only for a brief period?);
- Whether customers are faced with unexpected / hidden booking fees (i.e. are customers getting the deal they expected?)
This is one of a string of cases being scrutinised by the CMA under its consumer powers. It's a good reminder that the CMA's reach extends beyond competition law enforcement, to tackling any market in which customers are potentially misled or treated unfairly.
In determining your risk profile from a consumer perspective, some of the questions you should ask yourself include:
- Do you sell online? Online and digital commerce is a prominent characteristic of the CMA's cases to date, with data and technology being integral to the consumer harm found (e.g. investigations into online gambling, secondary ticketing, digital comparison tools).
- Do you offer services and if so how (e.g. subscription based)? Service based markets are a focus area, particularly those involving subscription services. The CMA's investigation into online dating services took issue with the lack of information and clarity around the services offered and automatic renewal and cancellation of subscriptions.
- Do your customers include vulnerable consumers? Markets that impact on vulnerable consumers, such as the elderly or those with a disability, are a priority area for the CMA. Care homes, children’s online games and payday lending are all markets involving vulnerable consumers that have already been investigated under consumer law.
- Do you use buyer feedback and endorsement? Markets that rely on / publicise buyer feedback and reviews are particularly susceptible to risk. Online reviews are trusted by consumers and are an important source of information for buying decisions. That trust is damaged through unfair and misleading trading practices (e.g. writing fake reviews or cherry-picking positive reviews).