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Dutch Advertising Code Committee: Booking.com’s website misleads consumers

Dutch Advertising Code Committee: Booking.com’s website misleads consumers

In a decision of 24 April 2014 the Dutch Advertising Code Committee (Reclame Code Commissie, RCC) concluded that Booking.com misleads consumers when it indicates on its website that only one room at a particular establishment is still available for a certain price. According to the RCC, by doing this Booking.com contravenes the Dutch Advertising Code (NRC).

Complaint
The decision was prompted by a complaint submitted to the RCC by marketing specialist Max Kohnstamm. In his complaint, he pointed out that Booking.com often creates the illusion on its website that the supply of rooms in certain hotels is scarce during a particular period, or at least that the hotel rooms on offer for a specific price are scarce or very scarce. Mr Kohnstamm also asserted that the impression is given that a number of other consumers are viewing the same offer at the same moment. Both the scarcity of the supply and the number of other people viewing the offer are deliberately exaggerated by Booking.com in order to entice the consumer to act immediately and book the hotel room.

Misleading advertising
It follows from section 8.2 NRC that advertising accompanied by inaccurate information or information that is unclear or ambiguous for the average consumer in relation to, for instance, availability and quantity, and which prompts or can prompt the average consumer to take a decision on a transaction that he would not have taken otherwise, is misleading. Misleading advertising is dishonest as referred to in section 7 NRC.

The RCC’s opinion
The RCC based its view on the starting point that Booking.com must be held accountable for the contested notices on its website. The supply of hotel rooms on Booking.com’s website is decided by the particular hotel. It is Booking.com’s choice, however, to set up its website in such a way that the contested notices (automatically) appear if the supply that the hotel makes available via the hotel gives reason to do so.

In the RCC’s opinion it is not adequately clear to the average consumer that the contested notices on Booking.com’s website about the availability of hotel rooms offered at a certain price only relate to the supply that the particular hotel has made available via Booking.com’s website and that in fact there may be a larger supply of hotel rooms than shown on Booking.com’s website. After all, it cannot be ruled out that the same accommodation may also be made available via other channels.

Booking.com had argued that the wording “we” in the phrase “we only have 1 room available” can be adequately clear to the consumer that only the supply on Booking.com’s website is being referred to. The RCC did not agree with this position. Given the context in which the phrase is placed, “we” can also be interpreted as referring to the particular hotel. The fact that Booking.com’s general terms and conditions explain that “we” refers to Booking.com does not, in the RCC’s view, eliminate the ambiguity in the contested notices.

The RCC concluded that the notice on Booking.com’s website that only one room is still available at a particular price is misleading and therefore constitutes dishonest advertising as defined in the NRC. The RCC recommended that Booking.com no longer advertise in this way. The RCC’s decision is not binding, incidentally.

RCC found the other complaints from Mr Kohnstamm to be unfounded. The RCC did not feel that it had been demonstrated that the available supply and number of visitors viewing a specific offer at a particular moment reported on Booking.com’s website were factually incorrect.

Both Mr Kohnstamm and Booking.com have 14 days to file an appeal against the decision with the Appeals Board.

Unfair commercial practices
The RCC’s decision shows some similarity to a decision from 11 October 2011 from the commercial court in Paris. In that decision, which has since become irrevocable, the commercial court ascertained that Expedia’s notification on its websites that “there is no room available during the selected period” is a misleading commercial practice in the sense of article L.121-1 of the Code de la consommation. This article is a transposition of article 6 of the Unfair Commercial Practices Directive. In the Netherlands this article is transposed in article 6:193c of the Dutch Civil Code. The wording of article 6:193c of the Dutch Civil Code is virtually the same as section 8.2 NRC. In view of the foregoing, Booking.com’s actions might therefore also be considered an unfair commercial practice as defined in article 6:193c of the Dutch Civil Code.

In the Netherlands, the Netherlands Authority for Consumers & Markets (ACM) is charged with enforcing the rules relating to unfair commercial practices. Unlike the RCC, however, the ACM can give binding decisions.

Price parity
What is striking is that the RCC does not devote any attention in its decision to price parity, also referred to as “best price guarantee”, that Booking.com demands of the hotels. At the end of last year the Bundeskartellamt, the German competition authority, concluded that price parity might prevent consumers from looking any further for a different offer. Price parity could therefore reinforce the misleading practice ascertained by the RCC.

By: Eric Janssen

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