There’ll be no more drip
pricing by Airbnb and eDreams in Australia
Airbnb and eDreams have promised to change their online
booking platforms to ensure that their headline prices
will include service, cleaning and payment fees payable,
in place of their current practice to add the fees to the
headline price later in the booking process (which is known
as drip pricing).
They have given court enforceable undertakings to
formalise their promise to the Australian Competition &
Consumer Commission (ACCC).
The undertakings address the
ACCC’s concerns that consumers who search for accommodation
and flight listings on online platforms: websites, mobile
sites and application software (apps) might be misled when
they see the headline prices: The advertised prices might
not be cheap when extra charges such as service fees and/or
cleaning fees (Airbnb) and service fees and payment fees (eDreams)
Why is the ACCC
cracking down on drip pricing practices for online bookings?
The ACCC is the Australian regulator responsible for
compliance with the Australian Consumer Law.
ACCC has taken a keen interest in misleading pricing
practices in the airline, ticketing, accommodation and
vehicle rental sectors. Its major concern is drip pricing in
the online marketplace. It explains:
Drip feeding consumers with information about
charges can cause detriment to competition and result in
consumers paying a higher price than the advertised
price or spending more than they realise (ACCC
Chairman Rod Sims quoted in Media Release)
To crack down on misleading pricing practices, the ACCC
relies on the misleading or deceptive conduct provision
(section 18), the false or misleading representations as to
price of services provision (section 29(1)(i)) and the
requirement to display a single price provision (section 48)
of the Australian Consumer Law.
The ACCC has
prosecuted budget airlines (Jetstar and Virgin) for drip
pricing in relation to airfares. A decision is pending. This
follows its successful AirAsia prosecution
describes drip pricing as:
Drip Pricing is where a headline price is
advertised at the beginning of an online purchasing
process and additional fees and charges (which may be
unavoidable for consumers) are then incrementally
disclosed (or ‘dripped’). (Media Release)
The ACCC explains that it is not the fees, it is the way
the fees are disclosed, that raises concerns:
The law does not prevent traders from charging
fees. However, it does require that fees are disclosed
clearly to avoid consumers being misled. (Mr Sims in
Why did the Airbnb and eDreams
pricing practices attract censure by the ACCC?
Airbnb’s business model is to connect travellers with
local accommodation hosts (peer-to-peer). It charges a
service fee on all accommodation bookings, which varies
between 6-12% of the base accommodation rate, depending on
the length of the stay. Airbnb charges a cleaning fee on
accommodation bookings, if the host requires it. Airbnb
collects the service fee and the cleaning fee.
What Airbnb failed to do was to display the service fee
and cleaning fee on the accommodation listing page (search
results) as part of the headline price. Instead, the fees
were displayed on a later page, the payment page, as
additional fees which were added to the price. Therefore,
the actual price payable per night was greater than the
price displayed as payable per night on the accommodation
The ACCC said that this was a breach of the
misleading or deceptive or false provisions because the
total amount payable should be displayed in the headline
eDreams business model is an online flights
and hotel booking service. It charges a service fee on air
ticket bookings which varies between $8 and $30, and applies
per person per route. eDreams also charges a payment fee
which varies depending on the payment method.
failed to do was to display a headline price which included
the service fee and the payment fee, on the page where the
consumer’s selected flight / hotel details appeared.
The headline price displayed on the mobile site and the
app was misleading or deceptive or false because it failed
to disclose the fees. The price display on the eDreams
website was also in breach of the single price provision
which states that the headline price must include mandatory
fees, where the fees are quantifiable.
The undertakings given to the
ACCC by Airbnb and eDreams for improved pricing practices
The ACCC accepted court enforceable undertakings (known as
Section 87B Undertakings) from Airbnb and eDreams. The form
of the undertakings was agreed. The undertakings are
obtained administratively, not through court proceedings.
They are entered on the ACCC public register.
Airbnb (Airbnb Ireland) undertook that for 3 years
its headline price would include the service fee and
cleaning fee (where quantifiable) on its websites, mobile
sites and application software where accommodation listings
are displayed. Where the fees are not quantifiable, the
existence of the fees must be disclosed. In addition, it
must establish a consumer compliance program.
(Vacaciones eDreams) undertook that for 3 years it would
have at least one fee free payment method (with no mandatory
fee), display clear information about conditions applying to
price availability and display a headline price for each
payment method used. In addition, it must appoint a
compliance officer to administer training to eDream
How should travel and leisure industry
businesses display headline prices?
headline price is displayed online, it must include or
disclose all fees payable.
- The service fees, booking fees, etc must be included
in the headline price, if they are quantifiable.
- The existence of service fees, booking fees etc must
be disclosed where the headline price is displayed, if
they are not quantifiable. Use of an asterisk beside the
price would achieve this.
Leisure Industry suppliers and booking platforms who
fail to do so are likely to be pursued by the ACCC as
part of its focus on drip pricing practices in the