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WASHINGTON, D.C. —U.S. Sens. Steve Daines (R-MT) and Bill Nelson (D-FL) today introduced legislation to protect consumers from online booking scams.
Daines and Nelson introduced The Stop Online Booking Scams Act that protects consumers from illegitimate third party websites that trick consumers into thinking they are making reservations directly with hotels.
Online booking sites have created a marketplace where consumers can shop for hotels across thousands of brands on a single platform. With the rise of online booking (480 bookings per minute) has come an increase in online booking scams. Fraudulent websites give the appearance of being connected to a hotel, but actually have no relationship with them. Transactions on these sites can result in additional hidden fees, loss of expected loyalty points, or even confirmation of reservations that were never made. The Stop Online Booking Scams Act addresses this problem.
“Tourism is an important part of Montana’s economy and we need to make sure that folks are getting what was promised to them,” Daines stated. “Legitimate online booking sites provide consumers with a valuable tool for comparison shopping, but deceptive websites trick consumers and scam them into paying for reservations that don’t exist.”
“This bill intends to crackdown on crooks and fraudsters who trick consumers into booking hotel rooms that don’t exist,” said Nelson, the ranking Democrat on the Senate Commerce Committee. “Millions of consumers use the Internet to easily compare prices and find great deals on hotel rooms. We can’t have a few bad actors ruin this for everyone else.”
Similar legislation was introduced in the U.S. House of Representatives earlier this year by Rep. Lois Frankel (D-Fla.).
The Stop Online Booking Scams Act:
Recognizes the Consumer Benefits of Legitimate Booking Sites:
- Includes a sense of Congress that recognizes the robust online marketplace that allows consumers to easily compare brands and make reservations
- Notes that actions by third party sellers that misappropriate brand identity or use deceptive sales tactics are harmful to consumers
Narrowly Targets Illegitimate Third Party Reservation Sellers:
- Makes it unlawful for a third party online hotel reservation seller who is not affiliated with the hotel to accept payment for a reservation unless the seller discloses that they are not affiliated with the hotel
- A third party seller may achieve this by:
- Including conspicuous language throughout the transaction
- Including prominent display of the seller’s brand identity
Gives Enforcement Authority to the Federal Trade Commission and State Attorney Generals:
- Makes a failure to comply with the third party disclosure requirements an unfair or deceptive act under the Federal Trade Commission Act
- Gives state AGs the authority to bring a civil action against companies who violate this provision
"Good morning, and welcome to today’s hearing on oversight of the Federal Trade Commission.
"This morning, we will hear directly from the FTC’s three sitting commissioners: Chairman Ramirez, Commissioner Ohlhausen, and Commissioner McSweeny. Let me take this opportunity to welcome you to the Committee and thank you for your service.
"I first want to note that Chairman Moran was scheduled to convene a Subcommittee hearing this afternoon. That hearing was to include a panel of thought leaders who would offer their own perspectives from outside the Commission. Due to scheduling conflicts that have arisen, we will unfortunately have to reschedule that hearing until a later date. We appreciate the willingness of those witnesses to testify and thank them for their understanding.
"The FTC was founded in 1914 by Congress – specifically by this Committee. In fact, the FTC is the oldest independent federal agency under the jurisdiction of this Committee. At the beginning of this Congress, the agency celebrated its 100th anniversary, an event that prompted retrospection both from the Commission and its observers.
"As many in the room know, the agency was born of the concern that more needed to be done to ensure competitive markets in the United States and to “bust the trusts” that threatened that competition. The Commission’s focus soon expanded to include an enforcement mandate against unfair and deceptive acts and practices that threatened consumer welfare.
"A common theme uniting the Commission’s dual focus on competition and consumer protection is ensuring freedom in the marketplace. Throughout the decades, and on the balance, the FTC has been a strong cop on the beat, ensuring that Americans reap the benefits of a functioning economy free from domination by firms with unfairly concentrated market power. It has also made it possible for Americans to be confident in their commercial transactions and grow the economy with the knowledge that they are protected from fraudsters and cheats seeking to do them harm.
"Among its many programs, the FTC administers the national Do-Not-Call program, which was created in 2003 and was once rated as the second-most popular federal initiative in American history, second only to the Elvis stamp. By 2010, the registry had topped 200 million numbers.
"But the agency has not been without controversy. In the late 1970s, for example, the agency drew criticism from none other than the Washington Post editorial board for its consideration of a regulation that would impose major restrictions on television advertisements aimed at young children in order to reduce the amount of sugar children eat. This regulatory overreach led the Post to criticize the Commission as the “great national nanny” and led Congress to adopt heightened procedural safeguards on the Commission’s authority to promulgate rulemakings. It was a recognition that the proper role of government must be limited.
"Despite these measures, the Commission has at times asserted itself in ways that continue to raise concerns about overreach. This Committee has pressed the Commission, for instance, on the scope of its Section 5 authority, which prohibits unfair and deceptive acts in commerce.
"When Congress drafted the FTC Act, we took care to ensure the prohibitions of Section 5 would be evergreen. And this flexibility is one of the statute’s key features. For example, in the 1930s, in one of its first cases to use this “unfair and deceptive” language, the Commission brought a paint misbranding case against a manufacturer who allegedly sold a product branded as high-quality white lead paint when the paint, in fact, contained no white lead.
"But Section 5’s flexibility does not mean it is open-ended. To best serve customers, the business community needs certainty, guidance, and predictability in order to comply with the law. American merchants are also entitled to fairness and due process when it comes to enforcement. When the FTC deviates from longstanding practice, it creates uncertainty about what the Commission’s interpretation of the law may be, who is liable, and the extent of that liability.
"We have heard concerns, for instance, about the Commission’s application of its unfairness authority to bring cases against private companies for lax data security practices. We all agree that consumers should be protected against unreasonable data security practices that put them at risk of identity theft and financial harm. But for some time now, a key element in any unfairness case has been whether or not a practice causes substantial – that is, monetary but not subjective – injury to consumers. In one recent high-profile case, the FTC sought to enforce against a small business on grounds that it failed to implement reasonable security measures to protect the sensitive consumer information on its computer network. The FTC took the extraordinary step of overturning the decision of its own administrative law judge, who found, on the basis of the evidence in the case, no monetary harm to the affected consumers. We will continue to monitor developments in that case.
"Another area of focus for this Committee has been regulations impacting technology innovation. One of the first hearings we held this Congress was on the Internet of Things. In that hearing, we examined the significant economic and societal impact the connected world might bring. At the time, I expressed my hope that we, the government, would have the humility to recognize that the best solutions are often not government solutions, and that we not stifle the Internet of Things before we, and consumers, have had a chance to gain an understanding of its real promise and implications.
"The Commission has also focused on the Internet of things, both with enforcement activity and guidance to industry. The Commission issued its Internet of Things report last year, which summarized a workshop the FTC held on the topic. The report provided policy recommendations that some, including Commissioner Ohlhausen, have criticized for its “government-knows-best” approach that could inhibit innovation and growth. While I appreciate the Commission’s willingness to explore new topics, I would caution the Commission to exercise regulatory humility, preserve “permission-less innovation,” and continue to address actual consumer harms as they arise.
"With that, I will close by thanking the Commissioners for being here today, and turn to Senator Blumenthal for any opening remarks he might have."
Thank you, Mr. Chairman. While we will consider a number of bipartisan bills today, I want to take a few moments to talk about the NASA authorization bill that's now before us.
Last week marked the 55th anniversary of President Kennedy’s challenge to send a man to the Moon by the end of the decade. The NASA bill we will be marking up today keeps us moving toward a new, and perhaps even more ambitious goal: to send humans to Mars.
NASA has made tremendous progress since Senator Hutchison and I joined with others on this committee to pass the bi-partisan NASA authorization in 2010.
We’ve seen successful engine and booster test firings and now full on construction of the Space Launch System (SLS), which will be the most powerful rocket ever made.
Orion, the next generation deep space capsule, had a successful test flight in 2014 and is now at Kennedy Space Center where workers are testing it for a launch on the SLS in 2018.
And, thanks to NASA’s collaboration with Boeing and SpaceX, we will soon once again have American rockets carrying our American astronauts to the International Space Station from American soil.
This bill keeps those missions moving forward, and authorizes all of NASA’s important endeavors in science, aeronautics, exploration, space technology, and education to continue through 2017.
I am pleased that this bill reaffirms that NASA is a multi-mission agency. But I certainly share the desire of many of the members on this committee to see more funding for science, aeronautics, and space technology.
Despite all of the progress NASA has made over the last several years, there is no denying the fact that we are still far short of the funding trajectory that was approved by this chamber all the way back in the 2010 authorization.
In 2013, the meat cleaver of sequestration slashed all the agency programs, taking around $1 billion from the agency’s top line and we have never fully recovered.
This senator’s intention is to work with our appropriators to get the best possible outcome we can for NASA in 2017, and to work next year on a comprehensive, multi-year NASA authorization bill.
I would like to thank committee members for all their hard work in getting this bill to this point. I urge you to support this important legislation.