The New York Attorney General’s Office announcement that he reached a $2.6 million settlement with Fareportal Inc., the operator of online travel websites CheapOair.com and OneTravel.com, resolving accusations that the company used “dark schemes ” and other deceptive marketing tactics to sell airline tickets and hotel rooms. NYAG Letitia James said, “Fareportal has used deeply deceptive tactics to trick millions of consumers into booking airline tickets and hotel rooms.”
This enforcement action deserves close scrutiny by online retailers, as the NYAG allegations here provide an excellent roadmap for a whole host of deceptive marketing tactics to watch out for and avoid.
The NYAG accused Fareportal of using “nefarious” marketing tactics known as “dark patternsto manipulate and trick consumers into buying airline tickets and hotel rooms. Although dark schemes can take many forms, they are often thought of as user interface designs and other marketing tactics used by online marketers to manipulate consumers’ ability to make informed choices about the products and services they purchase.
The NYAG alleged that when consumers purchased airline tickets, Fareportal posted false messages purporting to provide what appeared to be real-time messages about the limited number of tickets available at the advertised price. The NYAG charged that if a consumer searched for two tickets, Farreportal would post a message for the first two search results indicating that the number of tickets available was only one more than the consumer purchased. For example, if a consumer bought two tickets, Farereport would display the message “Only 3 tickets left” and a message such as “Book now: Only 3 tickets left at this price!”
The NYAG also alleged that Farereportal created a false urgency by falsely claiming that a specific number of consumers were currently viewing the same tickets, for example “33 people are viewing this flight”. The NYAG claimed that the number displayed was actually randomly generated and had no connection to the number of consumers, if any, who were actually considering purchasing those tickets.
The NYAG also said a posted countdown timer – purporting to show the time remaining until tickets sell out – was also fake. The NYAG charged that “the time remaining in the running countdown was arbitrary and unrelated to ticket availability. Farereport did not reserve tickets for the consumer during the countdown; in effect, another consumer could have selected and purchased the selected tickets at any time.”
Further, the NYAG alleged that when promoting the sale of travel insurance, Farreportal misrepresented the number of consumers who purchased travel insurance that day or for the particular route selected. The NYAG asserted that “the number in these messages did not, in fact, reflect the actual number of consumers who had purchased travel protection, but rather were computer-generated random numbers.” The NYAG also alleged that Farereportal misrepresented the number of consumers who also upgraded their seats for a particular flight. The NYAG explained: “Like the Travel Protection Messages, the purported percentage of passengers who purchased seat upgrades was actually a computer-generated random number.”
The NYAG accused Fareportal of also engaging in similar practices in connection with the sale of hotel rooms.
The NYAG also accused Fareportal of misrepresenting prices to induce consumers to purchase airline tickets.
Specifically, the NYAG alleged that Fareportal was marketing “certain airline tickets on its websites using price comparisons that appeared to show that Fareportal was offering tickets for sale at a discounted price.” The NYAG, however, blamed the fact that the discount prices quoted by Fareportal, which gave the impression that tickets were being offered at a discount, generally did not reflect actual savings. The NYAG explained, “In most cases, advertised tickets were never offered for sale at the highest price reduced by the comparison price.”
The NYAG also alleged that, when breaking down the price components, Fareportal misrepresented what “taxes and fees” included. Specifically, even though Fareportal’s service fees were listed under “Taxes and Fees”, they were not actually included in the amount billed for taxes and fees. Instead, the service fee was charged as part of the base ticket price.
Additionally, the NYAG alleged that Farreportal misled consumers about its policies for canceling ticket purchases. The NYAG blamed the fact that although Fareportal advertised “24-hour cancellation”, it did not clearly and pointedly disclose that consumers would be charged cancellation fees. The NYAG explained that “Fareportal disclosed this information via a pop-up that was only activated if a consumer clicked on the little ‘i’ icon next to ’24-hour cancellation’ and in the terms and conditions displayed. in fine print during check out.”
In the Cancellation insurance reached with the New York Attorney General, Fareportal agreed to pay $2.6 million in reimbursement and costs.
Fareportal also agrees not to make any future misrepresentations about the availability of airline tickets and hotel rooms or the number of people who are currently reviewing or have purchased the same tickets or add-ons. Also, if Farreportal uses a countdown timer, it agrees that it will explain the consequences of the timer running out of time.
With respect to price claims, Fareportal agreed to only charge strikethrough prices if the item was available for purchase by the public “in reasonable quantities and for a reasonable period of time”, i.e. immediately prior to offer or for a clearly defined period. disclosed. Fareportal has also agreed to clearly identify and describe the comparison price, and not to use a comparison price that has been used for the purpose of establishing a shadow price.
Insurance also requires Fareportal to properly identify its service charges and clearly and prominently disclose that service charges apply when purchases are cancelled.
On some level, there’s no big news here. At its core, this enforcement simply communicates the importance of telling the truth, not misleading consumers, and clearly and prominently disclosing terms and conditions.
The fact that the NYAG called the case investigation “dark patterns” is significant, however. Although the dark pattern claims here are largely based on the use of false claims, the case highlights that regulators are concerned about marketing practices that can impact consumers’ ability to make free and fully informed choices, even when such practices do not (expressly) involve misrepresentation. Using a countdown timer is a great example. Is using a countdown timer, which doesn’t tell you what will happen when the timer expires, a “dark practice” because it misleads you into thinking something is going to happen – even if the marketer makes no express statement about it what? We’re going to see a lot more attention to “dark patterns” from regulators in the months and years to come, both in the United States and around the world.
This case is also a great reminder that the “everybody does it” defense is probably no defense at all. While you may see other online marketers engaging in practices that create false urgency or exaggerate demand for their products, that doesn’t mean these claims are legal. It just means they haven’t been targeted yet.
And, finally, this case is yet another in a long line of regulatory enforcement actions that highlight the importance of clearly and visibly disclosing material qualifications. Regulators will tell you that consumers have virtually no obligation to research important details. If there’s something consumers need to know, you need to make sure the information is prominently disclosed, where consumers won’t miss it. Disclaimers hidden behind a discreet question mark or buried at the bottom of the page are unlikely to convince a regulator that you’ve told consumers what they need to know.
“We will not tolerate attempts to deceive consumers and will continue to protect every penny that belongs to New Yorkers” — New York Attorney General Letitia James