This class-action lawsuit, filed in 2005 on behalf of consumers nationwide, alleged travel-booking giant Expedia defrauded its customers by repeatedly breaching its contractual obligations and charging service fees under false pretenses in millions of hotel booking transactions.
The class action claimed Expedia purchased hotel rooms at a wholesale rate, and then annexed a "tax and service fees" charge to the rate it provided consumers. According to the lawsuit, Expedia paid taxes on the lower wholesale rate at which it purchased rooms, not on the higher rate it charged to consumers. The lawsuit contended that Expedia included the tax charge with the service fee and pocketed the difference between the wholesale and consumer tax rates. The class action also contends that Expedia breached its contractual promise by charging service fees that bore no relation to the costs of servicing a reservation but were simply designed to offset overhead and pad the profits of each reservation.
According to court documents, there were potentially as many as 15 million Expedia customers impacted
Hagens Berman reached a settlement agreement with Expedia valued at $123.4 million, which was at that time the largest consumer class action settlement to date in the state of Washington.
In 2009, after four years of litigation, a King County Superior Court judge granted the plaintiffs summary judgment and ordered Expedia to return $184 million in service fees to hotel customers. Expedia announced plans to appeal the verdict.