Travel sites' dodgy practices prompt pricing guidelines

Watchdog wants transparency after study finds users paying more than expected

A board displaying flight information at Changi Airport. The CCCS is proposing a set of guidelines on price transparency for all consumer-facing businesses.
A board displaying flight information at Changi Airport. The CCCS is proposing a set of guidelines on price transparency for all consumer-facing businesses.PHOTO: ST FILE

Players in the online travel booking space are being put on notice after a sweeping study of the sector found that some Singaporeans have been paying more than they bargained for when booking their trips.

Optional items added on by default and inaccurate "discount" deals are among the opaque pricing and marketing practices found to be used on these websites, the Competition and Consumer Commission of Singapore (CCCS) said yesterday.

The commission is proposing guidelines on price transparency for all consumer-facing businesses.

The guidelines will provide more clarity on what constitutes an infringement of consumer protection laws, and set out the factors and circumstances that the commission will consider when assessing if advertised prices and related practices are misleading.

The growing use of online travel booking platforms prompted the CCCS to undertake a nine-month-long market study on the sector here, the findings of which were released yesterday.

It did not name the firms found to have engaged in the practices flagged as unfriendly to consumers.

The commission's chief executive Toh Han Li told The Straits Times that the consultation period for the proposed guidelines presents "an opportunity for them to clean up these issues".

Under the Consumer Protection (Fair Trading) Act (CPFTA), the CCCS is empowered to investigate errant businesses and file an injunction application against them.

In its study, the commission flagged four common pricing and marketing practices that could mislead consumers: Drip pricing, which refers to fees added on to the advertised price during the transaction process; pre-ticked boxes for additional products or services that require opting out; strikethrough pricing, where one price is crossed out next to a "sale" price; and pressure selling, which can create a false sense of urgency for consumers to make a purchase.

Of the more than 500 consumers surveyed, over 80 per cent reported facing a higher price than advertised at checkout for flight and hotel room bookings, largely for fees that were mandatory.

The commission said mandatory fees should be included in the headline price.

The study, conducted between July last year and April this year, comes as more people make their travel arrangements online.

According to a Google-Temasek report last year, the online travel booking market in South-east Asia grew at a compound annual growth rate of 15 per cent between 2015 and last year, when it hit US$29.7 billion (S$41 billion). Singapore had the highest per capita expenditure in the region for this sector.

The CCCS study looked at the practices of 38 travel websites and also surveyed 750 industry members.

The full 60-page report, published on its website, details the online travel booking ecosystem and practices that it said could raise concerns about consumer protection and fair competition.

Low-cost airlines were highlighted as relying on additional revenue from add-ons to offer low prices for a basic flight, with some carriers presenting them as opt-out charges.

Budget airline Scoot last week scrapped its payment processing fees for customers booking tickets on its website. Jetstar, which charges booking and service fees for certain payment methods, said it is reviewing the recommendations.

Expedia said it welcomes the proposed guidelines.

Members of the public can provide feedback on the proposed guidelines until Oct 21.

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A version of this article appeared in the print edition of The Straits Times on October 01, 2019, with the headline 'Travel sites' dodgy practices prompt pricing guidelines'. Print Edition | Subscribe