ACCC Accepts Undertaking from Airbnb and eDreams for Drip Pricing
Tuesday 20 October 2015 @ 9.46 a.m. | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (the ACCC) has accepted court enforceable undertakings from Airbnb Ireland (Airbnb) and Vacaciones eDreams, SL (eDreams) following concerns that the companies made online price representations to consumers in Australia that were in breach of the Australian Consumer Law (ACL) [contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)].
Background to the Case
These matters were heard in December 2014, and judgment is reserved. The ACCC considers that Airbnb has, since November 2012, and eDreams, from January to December 2014, engaged in misleading and deceptive conduct and made misleading representations by failing to adequately disclose to consumers in Australia particular mandatory fees on key pages of one or more of their online booking platforms.
As part of the ACCC’s work in addressing drip pricing to date, the ACCC also brought proceedings in the Federal Court against Jetstar Airways Pty Ltd (Jetstar) and Virgin Australia Airlines Pty Ltd (Virgin), alleging that each airline engaged in misleading or deceptive conduct and made false or misleading representations in relation to particular airfares.
ACCC Allegations
The ACCC considers there Airbnb had “failed to adequately disclose” mandatory service and cleaning fees charged by accommodation hosts on search results pages and accommodation listing pages on its website, mobile site and apps accessible in Australia.
eDreams was accused of not making service and payment fees clear on some of the booking pages of its mobile site and app and failing to show a single price inclusive of mandatory service and payment fees on parts of its website.
These matters were raised by the ACCC as part of its commitment to addressing problematic drip pricing practices during online purchasing processes across a number of business sectors including airline, ticketing, and accommodation services.
What is Drip Pricing?
The ACCC defines Drip Pricing as where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges which may be unavoidable are then incrementally disclosed (or “dripped”).
This can result in paying a higher price than the advertised price or spending more than you realise. Online drip pricing is particularly prevalent the airline, ticketing, accommodation and vehicle rental sectors.
Reaction from the ACCC
Commenting on this matter in a recent ACCC Media Release, the Chairman of the ACCC, Rod Sims said:
“Drip feeding consumers with information about charges can cause detriment to competition and result in consumers paying a higher price than the advertised price or spending more than they realise. The law does not prevent traders from charging fees. However, it does require that fees are disclosed clearly to avoid consumers being misled.”
Changes Already Instituted
Airbnb and eDreams have each acknowledged the ACCC’s concerns and co-operated with the ACCC during its investigation. Both companies have separately undertaken to improve their pricing practices such that mandatory fees will be incorporated into prices displayed, or otherwise disclosed, on key pages during the booking flow to ensure consumers are given accurate price information “up front”.
Airbnb has also undertaken to establish and maintain a consumer law compliance program within the company, and eDreams has undertaken to ensure appropriate staff receives compliance training focusing on key aspects of the ACL.
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Sources:
Airbnb and eDreams give undertakings to ACCC for improved pricing practices – ACCC Release MR 193/15
