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Airbnb in trouble over drip pricing

The Airbnb Inc. application and logo are displayed on an Apple Inc. iPhone and iPad in this arranged photograph in Washington, D.C., U.S., on Friday, March 21, 2014. Airbnb Inc. is raising money from investors including TPG Capital in a financing round that would value the room-sharing service at more than $10 billion, said people with knowledge of the deal. Photographer: Andrew Harrer/Bloomberg via Getty Images

 

The Australian Competition and Consumer Commission (ACCC) has thrown the book at AirBnb

Vacaciones eDreams, SL (eDreams) has also been found to be in breach of the Australian Consumer Law (ACL).

The ACCC found that Airbnb failed to adequately disclose a mandatory Service Fee and also a Cleaning Fee, where applied by an accommodation host, on Search Results pages and Accommodation Listing pages on its website, mobile site and apps accessible in Australia.

eDreams also failed to adequately disclose its mandatory Service Fee and Payment Fee on certain booking pages of the eDreams mobile site and app and, on particular pages of its website, failed to comply with the requirement to specify a single total price inclusive of the mandatory Service Fee and Payment Fee, in circumstances where those fees were quantifiable at the time of the price representations.

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. Drip pricing is where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges (which may be unavoidable for consumers) are then incrementally disclosed (or ‘dripped’).

“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,” ACCC Chairman Rod Sims said.

“The law does not prevent traders from charging fees. However, it does require that fees are disclosed clearly to avoid consumers being misled,” Sims said.

Airbnb and eDreams have each acknowledged the ACCC’s concerns and cooperated 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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