In 2005, HBSS filed a class-action lawsuit on behalf of Expedia customers claiming the online travel booking site paid taxes based on the wholesale price of hotel rooms, but collected taxes from customers based on the higher retail price, pocketing the difference.
The lawsuit claims Expedia charged excessive fees under false pretenses in millions of hotel transactions, lumping the additional charges under 'service fees' during the booking process.
According to court documents, Expedia bundled the service-fee charges with taxes into a single line item, failing to disclose the separate amounts of each to consumers.
The filed suit seeks to represent all customers who purchased a hotel reservation on Expedia.com from Jan. 10, 2001 through June 11, 2008.
July 30, 2009 - HBSS has reached a proposed settlement in the Expedia litigation. Pending court approval of the proposed settlement, Expedia has agreed to pay up to $123.4 million in cash and credits to settle claims that the travel-booking giant defrauded consumers by repeatedly breaching its contractual obligations by charging service fees under false pretenses in millions of hotel transactions, as well as claims the company violated the Consumer Protection Act.
The settlement includes anyone who purchased hotels from January 10 2001 to June 11, 2008 or travel packages including a hotel stay from Feb. 18, 2003 to Dec. 11, 2006.
If the court preliminarily approves the settlement, the parties will notify potential class members about the settlement and provide instructions on how to opt out of the settlement or object to it. If the settlement is approved, class members will receive instructions on how to make an election to receive a cash payment. If class members do nothing, they will automatically receive Expedia credit. The parties will ask the court for preliminary approval on August 10, 2009.
May 28, 2009 - Yesterday a King County judge ruled in favor of consumers, ordering Expedia to pay $184 million for repeatedly breaching its contractual obligations to consumers by charging service fees under false pretenses.
The judgment is the largest in Washington state history for a consumer class action.
The Judge ruled that Expedia collected a total of $184,470,452 in service fees, which she is ordering the company return to consumers who purchased hotel or travel packages including a hotel stay from Feb. 18, 2003 to Dec. 11, 2006.
Expedia must still defend itself under charges of violating Washington's Consumer Protection Act. Trial is set for July.