A common complaint about the NAD process is that there are no counter claims and the entire process is focused on the Advertiser being required to provide adequate substantiation to support its claims as opposed to a Lanham Act challenge where typically the burden of proving an ad is false or misleading falls on the Plaintiff or Challenger. Or maybe not. Just after Expedia filed a challenge to the pricing advertising practices of Booking.com, the Amsterdam-based travel site, a first time participant at NAD, filed its own similar challenge. And NAD issued separate decisions on the same day. A bold move for Booking.com but certainly available if an Advertiser feels it is being questioned about practices the Challenger is also employing (insert favorite expression re pot and kettle black or stones and glass houses) and does not want to proceed merely on the defensive (assuming one has adequate resources to both challenge and defend simultaneously within NAD’s tight scheduled timeframe). In this case both travel sites were offering “strike-through” pricing where an alleged full price is crossed out and the discounted price offered by the travel site is shown. NAD recommended that both discount online travel shops include clear disclosures so consumers understand exactly how those “original” struck through prices were calculated and whether there are inventory limits on the availability of the low priced rooms. NAD also recommended that the high strikethrough price should not be an outlier rate. NAD did not like how Booking.com calculated their savings – looking at the second-highest rate paid by another guest for a similar room within a 45 day period before or after the customer’s planned stay, concluding that even if accurate the fluctuation in hotel pricing between up to two seasons can be so significant that the purported higher strike through price may not be consumer relevant.
The cases also serve as reminder lessons on what NAD expects for companies making “up to” savings claims. For claims like “Save Up to 50%,” the Advertiser must be able to demonstrate that at least 10% of its rooms in each advertised city were available at the highest discount rate. The “Up To” claims cannot be outliers. Further NAD suggested that when advertising “from” prices (“rooms from $99/night”) that such claims be modified or discontinued when there are no more rooms available at the low “from” price. While the complexity of online travel sales has some unique
elements, the discussion on “Up To” and “From” pricing claims are equally relevant to any retailer advertising a sale. One other side point regarding sale claims is that NAD noted Expedia had offered a 50% Winter Sale but had used the discount call out near its statement of how many hotel rooms it offered. NAD suggested this juxtaposition implied that the sale was on its entire inventory. Probably not a big deal as the sale had ended but something to consider to separate a sales promise from discussions of the breadth of store inventory unless a sale is store-wide.
An interesting twist in the case is that Booking.com challenged Expedia’s use of “Expedia Special Rate.” Expedia asserted it had been using this term for 8 years without challenge. The NAD said that passage of time was no defense and that at any time a claim can be assessed for whether it is false or misleading. In this case, Booking.com asserted the claim meant that Expedia offered better pricing than other competing websites when often the pricing for all travel sites was the same. Expedia explained that this term meant many things including that it contracts directly with the
hotels and can offer rates that will not be lower elsewhere and that Expedia customers are guaranteed a certain number of rooms at this rate. NAD decided that one reasonable interpretation of the term “special rate” was that it offered a lower rate than available at other websites so counseled Expedia to disclose what it meant by a “Special Rate.” It may be surprising to some that a claim of “special” would be interpreted as “more special” relative to other discount travel agents so this is certainly an area to watch and see what NAD does in future.