House of Lords report calls for online travel agents to be investigated
Holidaymakers at risk of being overcharged as online agents lack transparency, it has been claimed.
Online travel agents (OTAs) have been accused of ripping-off customers in a scathing new report.
It claims certain sites are guilty of rigging search displays, providing fake reviews and using cookies to charge some holidaymakers more.
The House of Lords EU Committee report also called on the Competition and Markets Authority (CMA) to "carry out a rapid market investigation" into the sector.
Return shoppers could be charged more
One of the ways people could be exploited is through pesonalised pricing. This is when online platforms use information provided by by the customer to fix a price for a particular item. So if, for example, you look at a flight, car hire or hotel multiple times, they’ll remember it and bump up the cost.
According to the report, the hospitality industry has also suffered at the hands of online travel agents. Price parity clauses, which force hotels to offer OTAs their best price, stifle competition and harm customers, it added.
These clauses ensure that sellers can’t sell a product that is currently offered through its online platform cheaper elsewhere. This could be through their own website or anywhere else, be it online or offline.
At times OTAs can be more underhanded, using deliberately misleading messages about vacancies as well as ‘shell’ websites which pretend to be the hotel website to take bookings at a higher rate, the report claimed. Some online agents even allegedly intimidate hoteliers that give better rates to its competitors.
Responding to the report, British Hospitality Association chief executive Ufi Ibrahim said:
“These OTAs wield vast power and hold our industry hostage by commanding punitive rates of commission. We are pleased that this influential committee is proposing Europe wide steps to enable our industry to challenge anti-competitive online practices when they arise.”
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Taking action
To tackle these tactics, the committee is recommending a traffic light-style system that assigns companies a green, amber or red mark to show good practice on privacy policies. This kite-mark safety system should be forced on all websites and apps across the EU to let the customers know who can be trusted the most.
Consumer protection law should also be updated to require online platforms to be more transparent about how they rank and present search results, publish ratings and reviews and when they use personal data from users to determine prices, it said.
Finallly, a panel of independent experts should be created to keep track of enforcement, privacy and innovation. As well as identifying emerging challenges to the sector, it would address public concerns and engage with regulators, policy makers, businesses and citizens on top of making policy recommendations to the European Commission.
Instead of bringing in a new regulatory framework, the committee argues that existing regulations should be updated and more robustly enforced as competition law can’t keep up with the pace of change in the digital market.
What you can do now
In the meantime, clear your cookies on travel websites.
The website you’re on will remember you and it could bump up the price of what you’re trying to book if you visit it multiple times.
It’s also really important to learn how your data and personal information is used by online travel agents and third party search engines. The report says that our trust in online platforms is ‘very low’ because we don’t fully understand how online platforms collect and use data.
The best way to protect yourself is to have a look at the privacy and cookie policy of any website you’re visiting. You’ll be given a rundown of what your data is used for as well as how to control what is used. There should be a link to more information on the website’s homepage.
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