Last updated: 03:22 PM ET, Thu September 01 2016

Expedia to Investigate Scam Allegations Amid Lawsuit

Hotel & Resort | Patrick Clarke | September 01, 2016

Expedia to Investigate Scam Allegations Amid Lawsuit

Image courtesy of Expedia, Inc.  

Expedia is set to launch an investigation after a pair of California hotels recently filed a class action lawsuit against the Bellevue, Washington-based company accusing it of implementing bait and switch tactics.

The Buckeye Tree Lodge and Sequoia Village Inn in Three Rivers, California, filed the suit last month alleging that,, Orbitz and other Expedia, Inc products operated a scam designed to funnel business to hotels that pay a fee via falsely advertising that nonparticipating hotels have no available rooms.

According to Courthouse News Service, the lawsuit states the following: 

"Expedia's deceit is brazen. Expedia posts fake telephone numbers for Buckeye Tree Lodge and other class member hotels to divert callers to Expedia’s own operators, who then try to book the consumers at Expedia member hotels."

"Worse, Expedia then targets social media advertisements — for hotels it cannot book — to those consumers, using the brands of class member hotels to divert business from them to Expedia members."

"Believing Expedia's representation that there is no availability at a class member hotel, consumers take their business to Expedia member hotels. And the bait and switch is complete."

Among the several charges filed against Expedia, Inc are trademark violations, unfair competition and business code violations, among others.

READ MORE: Expedia: Sluggish Growth Not Due To Direct Booking

The two properties allege that the websites push deals for participating hotels but lie about availability at nonparticipating properties. The alleged practice is compounded by the fact that consumers don't know which hotels are member hotels, according to the plaintiff.

"The deception starts even before consumers visit the websites," the suit states. "Defendants purchase false and misleading advertisements on internet search engines like Google, to funnel traffic to their websites."

"For example, when a consumer uses Google to search for the Buckeye Tree Lodge, the engine's top result returns an advertisement purchased by defendants to 'Book Buckeye Tree Lodge' and promising 'Incredible Offers on Great Hotels. Buckeye Tree Lodge.'"

So far, an official speaking for Expedia only told that it takes the aforementioned allegations seriously and is now looking into "whether the standard practices were followed."

"However, the value of our marketplace as a fair and effective way to connect hoteliers and travelers is our number one priority," the woman concluded.

Although it remains to be seen what Expedia's investigation will turn up and how the lawsuit will play out, it's quite clear that the allegations are disturbing and likely to raise some eyebrows within the hotel industry.

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