Who: The Competition and Markets Authority (CMA)
Where: United Kingdom
When: 26 February 2019
Law stated as at: 14 March 2019
On 26 February 2019, the CMA issued a set of key principles designed to help accommodation booking platforms to avoid practices that could mislead consumers.
The CMA highlights four practices as misleading for consumers. We examine the CMA’s guidance for each of these practices in turn, below.
Practice 1 – Failure to disclose the effect of payments on search results
The CMA found that the default search result ranking systems used by accommodation booking platforms are commonly influenced by, amongst other factors, the amount of money earned by the platform from the accommodation (or from other sources). Failure by accommodation booking platforms to explain the methodology behind search rankings may lead a consumer to believe that the search results might, for example, be ranked by relevance to the criteria they have inputted, rather than by the financial gain involved for the platform.
The CMA recommended that accommodation booking platforms:
- prominently inform consumers how money earned by the accommodation booking website may affect search result ranking;
- where a particular listing has paid to appear to in a certain position, clearly label the listing as such; and
- clearly differentiate paid-for listings from other listings.
Practice 2 – Misleading reference prices
To ensure consumers do not make purchases based on misleading comparisons against higher prices that are not indicative of the true underlying value of the product or service, the CMA confirmed that it expects accommodation booking websites to refrain from:
- presenting a price as a discount unless the price truly represents a saving for the consumer on a like-for-like basis; and
- implying that comparisons between prices that are payable in different circumstances (e.g. for different stay dates) represent a discount, unless the relevant features of the two offers are clearly explained to the consumer.
Practice 3 – Misleading presentation of price
The CMA explained that, to ensure that consumers are not misled about the amount payable for their booking:
- the price shown must always be the total price. Unavoidable fees, charges and taxes that could reasonably be calculated in advance must be made clear to the consumer;
- the calculation method (i.e. exchange rate) for any conversions to foreign currency must be provided to the consumer; and
- if search results are ranked by price, it must be the total price that is used and displayed
Practice 4 – Misleading popularity and availability statements
The CMA clarified that it considers statements designed to place pressure on consumers, such as “X other people are viewing this property right now”, to be misleading. Any statements concerning popularity, availability and price should be designed with the sole aim of informing consumers, rather than creating an artificial impression of urgency or scarcity.
Why this matters:
The principles published by the CMA are relevant to all online accommodation booking sites offering services to UK consumers. Accommodation booking sites that fail to meet the obligations by 1 September 2019 run the risk of enforcement action being taken by the CMA, which could result in fines, suspension or bans for the website.