A lawsuit was filed against Expedia today on behalf of consumers. It alleges that Expedia is cheating customers who book and pay for hotel rooms through Reservations.com by inflating a hotel "tax and fee."
The lawsuit contends that Reservations.com requires consumers to pay a "service fee" room charge and "tax recovery charges and fees." Reservations.com claims that the "tax recovery charges and fees" are "monies that the hotels must pay to the government."
However, Hagens Berman claims that those taxes and fees are not actual taxes and exceed the real amount of taxes that are actually owed when booking a hotel room.
To explain what they mean, Hagens Berman gave an example. They booked a room at the W Hotel in Seattle through Reservations.com for November 22-24, 2018. The room rate appeared as $159 and the "tax recovery charges & fees" came out to $50.88.
The total state and local Seattle tax for Seattle hotel rooms are 15.6 percent, plus $2 per night, which should have made the "taxes and fees" for this room only $27, not the $50.88 listed.
The lawsuit claims that Expedia, the "back room" supplier of most of Reservations.com's room inventory, pockets the additional overcharge.
In this example, Reservations.com overcharged $23.88 for the W Hotel room, and if you multiply that by 4 million, the number of rooms booked through the site, they've collected more than $95 million dollars in unlawful "tax" charges.
"While Expedia takes an under-the-table cut through its deal with Reservations.com, consumers are left completely in the dark, unknowingly paying inflated costs disguised as 'taxes and fees,'" said Steve Berman, managing partner and co-founder of Hagens Berman. "Any reasonable consumer would assume this to be a government-regulated hotel tax, and that's exactly what Expedia has banked on and profited from, for years."
The lawsuit claims that by overcharging consumers on Reservations.com, it violates the Racketeer Influenced and Corrupt Organizations Act (RICO).
The lawsuit states: "Expedia, Inc. and its subsidiaries, together with Reservations.com, 'operated an association-in-fact enterprise engaged in interstate and foreign commerce, which was formed for the purpose of obtaining money from consumers for inflated 'Taxes & Fees' payments, through which they conducted a pattern of racketeering activity' in violation of RICO."
"Consumers are often warned that the 'devil is in the details' of any online transaction, but here we have indeed uncovered what we believe to be an intentionally unlawful scheme to dupe consumers," Berman added.
The lawsuit aims to collect and return overpayments to consumers who booked and paid for a hotel with Reservations.com from 2014 to now. They can join the lawsuit at no cost to them.
"Expedia should have known that it was only a matter of time before this consumer scam was brought to light, and we intend to fight to reclaim consumers' losses," Berman said.
This isn't the first time that Hagens Berman has gone up against Expedia. They filed a class action lawsuit against Expedia in 2005 for charging consumers service fees under false pretenses, In 2009, a judge ordered Expedia to pay $184 million.
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