Korea’s FTC orders Booking.com, Agoda to change rules
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Hotel booking sites Agoda and Booking.com have been ordered to revise their no-refund policies or potentially face legal action. Korea’s Fair Trade Commission (FTC) announced on Wednesday that it has ordered the two global travel platforms to revise the terms and conditions which allow them to unfairly deny refunds for products and services.
Customers are currently unable to get refunds on some hotel bookings or additional services, like hotel meals, reserved through Agoda and Booking.com even if reservations were made well in advance. Agoda and Booking.com have the same parent company, Booking Holdings, which also operates travel platforms Kayak and Priceline.
“Though we recommended that Agoda and Booking.com revise their no-refund clauses last November, the companies failed to take heed without any particular reason,” read an FTC report. “We decided last month to issue an order forcing them to make the necessary revisions.”
The FTC is not asking them to ban all no-refund products, but to at least accept refund requests made long before reservation dates.
“The companies will still be able to deny refunds on highly discounted products or bookings made just before the reservation date,” said a spokesman. “But it is unreasonable for them to deny refunds for reservations made months ahead.”
“The probability that a booking platform will be able to resell a product after a consumer cancels a reservation long before reservation date is very high,” he added. “The platform operators will face few losses if they resell the products.”
The Act on the Regulation of Terms and Conditions gives the FTC the right to take “measures necessary to correct the terms and conditions” of a business that incurs losses to “several customers because the business person fails to comply with the recommendation” to revise “unfair terms and conditions.”
“Though we recommended that Agoda and Booking.com revise their no-refund clauses last November, the companies failed to take heed without any particular reason,”
According to the Act, the FTC also has the right to report the case to prosecutors if companies fail to respond accordingly within 60 days.
The two companies have yet to give an official response. Agoda’s Peter Allen, who serves as the head of the company’s external relations department Agoda Outside, was in Seoul on Wednesday to give a talk at a leadership forum organized by the company.
Agoda and Booking.com are not the only booking platforms that have been flagged for having policies that potentially harm customers.
From 2016 through October 2017, the FTC reviewed the terms and conditions of major hotel booking sites operating in Korea and found that seven, including Agoda and Booking.com, had unfair refund policies.
Unlike Agoda and Booking.com, Interpark, Hana Tour, HotelPass, Hotels.com and Expedia have since revised their terms and conditions.
The number of consumer complaints against international travel platforms grew in Korea last year.
According to the Korea Consumer Agency, consumers filed a total of 5,721 complaints in the first half of 2017 against international travel and accommodation platforms, or 46.4 percent more compared to the same period in the previous year.
Questions & Answers
Q.What is the primary change the FTC is ordering Booking.com and Agoda to make?
What is the primary change the FTC is ordering Booking.com and Agoda to make?
The FTC is ordering them to revise terms and conditions that unfairly deny refunds for products and services, especially for reservations made long in advance of the booking date.
Q.Will Booking.com and Agoda have to accept all refund requests under the new order?
Will Booking.com and Agoda have to accept all refund requests under the new order?
No, the FTC is not asking them to ban all no-refund products. They can still deny refunds for highly discounted products or bookings made just before the reservation date.
Q.What could happen if Booking.com and Agoda fail to comply with the FTC's order?
What could happen if Booking.com and Agoda fail to comply with the FTC's order?
If they do not respond accordingly within 60 days, the FTC has the right under the Act on the Regulation of Terms and Conditions to report the case to prosecutors.
Q.Are Agoda and Booking.com the only companies flagged by the FTC for unfair refund policies?
Are Agoda and Booking.com the only companies flagged by the FTC for unfair refund policies?
No, seven major hotel booking sites operating in Korea, including Agoda and Booking.com, were found to have unfair refund policies between 2016 and October 2017.
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