Expedia Class Action Challenges ‘Taxes & Fees’ Charges

Expedia, Hotels.com, and other third party booking sites overcharge consumers for taxes and other fees on purchases through Reservations.com, according to a class action lawsuit.

Reservations.com is a third party booking site where consumers can reserve hotels rooms.

Unlike other travel companies, Reservations.com reportedly does not have direct contracts with hotels.

Instead the website obtains hotel room information from Expedia through its subsidiary EAN, the class action states.

When a consumer purchases a room through Reservations.com, they are charged a service fee of $14.99 per room to the booking site and taxes and fees to Expedia.

The recent class action against Expedia and its subsidiaries claims that the companies inflate the taxes and fees charge over what is to be paid to the government.

According to the hotel class action lawsuit, Reservations.com represents the tax charges as following: “The taxes are tax recovery charges we pay to our vendors. We retain our service fees and compensation in servicing your travel reservation. Amounts displayed in the Taxes and Fees line for prepaid hotel transactions include an estimated amount we expect the hotel to bill for applicable taxes, government fees, and other charges that the hotels must pay to the government.”

Based on these representations, a reasonable consumer would allegedly assume that the tax charges would be the amounts imposed by taxing authorities. However, the Expedia class action claims that the company overcharges their consumers and “pockets the tax overcharge as additional profit.”

“At the time of booking, Defendants collect the ‘Taxes & Fees’ charge directly from Reservations.com’s customers, and Defendants later remit the (much lower) actual taxes and fees to either the hotels or—in some jurisdictions—directly to the government,” the Expedia hotel price class action lawsuit claims.

The Expedia class action lawsuit uses the example of the W Hotel in Seattle to demonstrate the overcharge. For Nov. 22-24, 2018, Reservations.com reportedly showed a room rate of $159 and “tax charges & fees” of $50.88.

The state and local tax for a Seattle hotel room is reportedly 15.6 percent, plus $2 per night – meaning that the tax and fees should have been $27. The Expedia class action claims that the remaining $23.88 is an overcharge by Expedia used to increase profits.

Additionally, Expedia allegedly charges significantly less for the same rooms through their own hotel booking site when compared to the tax charges on Reservations.com.

The Expedia class action lawsuit claims that the company sometimes charges more than double in taxes on Reservations.com relative to their own booking site.

Reservations.com reportedly represents that 4 million room nights have been booked through its website by consumers. Based on an overcharge of $23.88 as seen by the room at the W hotel, the class action estimates that Expedia has wrongly collected more than $95 million in unlawful tax charges from their customers.

Plaintiff Patricia Woodell seeks to represent a Class of consumers who booked and purchased a pre-paid hotel room reservation using Reservations.com where the room inventory was supplied by Expedia or its subsidiaries since Jan. 1, 2014.

She also seeks to represent a Class of the same consumers from Washington.

The Expedia class action lawsuit seeks actual damages, treble damages, court costs, and attorneys’ fees.

Woodell and the proposed Class are represented by Steve W. Berman and Andrew Volk of Hagens Berman Sobol Shapiro LLP; James L. Ward Jr. and Ranee Saunders of McGowen Hood & Felder LLC; and Ian W. Freeman and John P. Linton Jr. of Walker Gressette Freeman & Linton LLC.

The Expedia Tax Charges Class Action Lawsuit is Woodell v. Expedia Inc., et al., Case No. 2:19-cv-00051, in the U.S. District Court for the Western District of Washington.