Competition watchdog proposes crackdown on widespread tricks by online travel booking firms
SINGAPORE — Singapore’s competition watchdog is moving to crack down on the proliferation of online travel booking sites that try to trick consumers with hidden fees, such as credit card charges, or by use misleading pressure tactics to get a quick sale.
SINGAPORE — Singapore’s competition watchdog is moving to crack down on the proliferation of online travel booking sites that try to trick consumers with hidden fees, such as credit card charges, or use misleading pressure tactics to get a quick sale.
The Competition and Consumer Commission of Singapore (CCCS) has completed a nine-month study of online travel booking. It said in a report released on Monday (Sept 30) that many consumers here are affected by misleading practices.
To better protect consumers, the CCCS has issued a set of proposed “dos and don’ts” for all industries dealing with consumers — including online travel booking businesses, which, it said, make up about 60 per cent of South-east Asia’s online economy.
The proposed guidelines deal with how these firms should display and advertise their travel packages, flight tickets and hotel stays, among other marketing materials.
The guidelines — which will apply to both online and offline transactions — will also provide more clarity on what constitutes an infringement of the Consumer Protection (Fair Trading) Act (CPFTA), said the CCCS.
The full 60-page report is published on its website. Public feedback on the proposed Guidelines on Price Transparency can be made to the CCCS until Oct 21.
Here are the main areas of concern, and the proposed guidelines:
1. Drip pricing
How it works: Drip pricing is when online sites do not disclose both mandatory and optional charges upfront — such as credit card or insurance charges — which can lure consumers into making a purchase based on incomplete price information. It restricts competition by making it harder for consumers to compare product offerings across suppliers. The CCCS noted that some consumers complete a transaction even if they object to the additional charges as they may have no time to do another search.
New guidelines: Online travel booking providers should ensure that any unavoidable or mandatory charge, such as taxes, surcharges and room cleaning fees, are included in the total headline price.
Any optional add-ons such as travel insurance should also be clearly indicated in a prominent and noticeable way to consumers, and properly disclosed. For example, the terms and conditions, any qualifiers, and charges should be made clear to consumers.
If online travel booking providers display prices to consumers only in Singapore dollars but payments are processed offshore, they should clearly state the fact that it is a cross-border transaction that may involve unavoidable additional fees associated with currency conversions, or cross-border payments which may be disclosed to the consumer only at the point of billing.
2. Pre-ticked boxes
How it works: This is when boxes or options for services are pre-checked by default by a booking site, and unwitting consumers end up buying unwanted add-on products — such as travel insurance, car rentals or accommodation when booking only flights — as a result of failing to opt out by unchecking the pre-ticked boxes.
New guidelines: Suppliers should avoid using pre-ticked boxes to automatically include add-ons. If pre-ticked boxes are used, suppliers must provide proper disclosure of the goods or services offered in a clear and prominent manner.
3. Strikethrough pricing
How it works: This is when a discount price is displayed beside the purported “original” price, which has a line through it. This misleads consumers into making a purchase — or paying a higher price — when the comparison between a current and a crossed-out price is false or misleading. The consumer may have no way of knowing how the discounted price was derived.
New guidelines: When online travel booking providers offer a discount or make comparisons with a previous price to represent a price benefit — or both — they should use an actual, bona fide previous price that provides a legitimate basis for the price comparison, so that consumers are not misled about the savings they may achieve from buying the discounted product or service.
4. Pressure selling using false or misleading claims
How it works: Travel booking sites may use false or misleading claims to create a sense of urgency for consumers to make a fast purchase based on inaccurate information. For example, sites may claim a discount for a flight or accommodation is available only for a short time, or that only a certain number of hotel rooms or flight seats are available, or that a certain number of other online buyers are looking at a flight or hotel room at that time, for example. CCCS noted that in some cases, the information may be accurate, but in other cases it may be misleading.
New guidelines: Online travel booking providers should not make false or misleading claims that create unwarranted pressure or a sense of urgency for consumers to make an immediate purchase or booking, for example by promoting a temporary “sale” or “special” price for a limited period when the “sale” or “special” price will still be available beyond the limited period, or giving a false or misleading impression of limited availability of a product.
WHY IT MATTERS
Online travel booking sites are growing in popularity. A recent study also reported that nearly a third of Singaporeans said they have been scammed — or nearly scammed — when booking a holiday online.
The proposed guidelines aim to protect consumers who turn to such channels to plan their travels, which include searching for, comparing and buying air tickets and hotel accommodation online, whether directly from airlines and hotels, or from online travel agents such as Expedia, Booking.com, or from web aggregators such as Skyscanner and Trivago.
According to the Google-Temasek e-Conomy SEA report in 2018, online travel booking sector grew to US$29.7 billion (S$ 41.1 billion) last year, and Singapore was estimated to be the third largest country in South-east Asia in terms of online booking market value, with the highest per-capita online travel booking expenditure in the region.
The CCCS also said that price is an important factor for most consumers and is used for comparison between alternatives. In the absence of clear disclosure on prices and pricing practices, consumers may be misled, it added.
HOW THE CCCS CAME UP WITH THE GUIDELINES
The CCCS spent about nine months between July last year and April studying the online travel booking sector in Singapore in one of its first projects since taking on its new consumer protection role last year.
The study identified the four common practices of online travel booking providers that give rise to consumer protection concerns.
The CCCS has also looked into other commercial practices and arrangements in the online travel booking industry, such as search rankings, misleading user reviews and pricing algorithms, but its study did not indicate evidence of these practices giving rise to harm to consumers, or impeding competition.
Nevertheless, the watchdog said it will continue to monitor market developments in the industry in Singapore.