Booking Holdings could face a Federal Trade Commission investigation over allegations that its subsidiary Priceline.com uses third-party hotel booking services that charge hidden fees in violation of consumer protection laws. According to sources cited by Reuters, the FTC could sue Priceline.com and its affiliate Guest Reservations over claims that customers were misled into thinking hotel reservations were made directly through the hotel while being charged substantial fees for services such as maid service and resort fees, some of which can more than double the original cost of the room. Priceline.com said the practice is not deceptive because consumers are notified of the added fees and total cost of the booking prior to paying online, but the FTC claims these fees are often hidden deep within taxes and other legitimate fees, making them difficult for consumers to identify before booking. The FTC is especially interested in Guest Reservations, a hotel aggregator that allegedly impersonates other businesses and engages in deceptive billing practices and has been the subject of more than 1,000 complaints to the Better Business Bureau, and which is also the subject of a lawsuit filed by San Francisco City Attorney David Chu. The FTC investigation could ultimately carry a penalty of more than $500M, and shares of Booking Holdings remain under pressure and are trading lower for a fifth consecutive day.
Booking Holdings IncFTC investigation and potential $500M+ lawsuit over Priceline.com's hidden hotel fees creates regulatory/legal risk for Booking Holdings.
