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Client Alert - New DOT Advertising Regulations
In 2012, the Department of Transportation’s new consumer protection regulations went into effect. This legislation dramatically changed the way that carriers, travel agents and tour operators do business. The DOT enforces the new laws via the Unfair and Deceptive Practices statute where the standard penalty is $27,500 per violation / per day. 49 USC 41712. Below is an overview of the four biggest changes in this new law.
Full Fare Advertising Law
Under the DOT’s new interpretation of the Full Fare Advertising Law, when a carrier, agent or tour operator advertises the price of an airfare or package containing an airfare, they must display the full price to be paid inclusive of all taxes, surcharges and fees. 14 CFR 399.84(a). Previously, the DOT allowed government taxes and fees to be “broken-out” of the advertised price if proper disclosure was provided. This is no longer permitted as the DOT now requires advertisements to show the entire price to be paid by the customer.
Baggage Fee Disclosure
Under the new baggage fee disclosure law, carriers, agents and tour operators are required to disclose the existence and amount of baggage fees when advertising an airfare or package containing an airfare. 14 CFR 399.85(b). Carriers are required to provide the specific fees applicable to the itinerary. While agents should also provide the specific fees, if this is not possible, they will be permitted to provide a hyperlink to the specific carrier’s baggage fee webpage.
When offering optional products or services (e.g. upgrades, insurance) in conjunction with an airfare or package containing air transportation, consumers have to opt-in to purchase the ancillary service. 14 CFR 399.84(c). In the past, agents and carriers have automatically added optional services like travel insurance, allowing consumers to opt-out if they did not want it. With the new law, the DOT requires purchases of all optional services to be knowing and voluntary by opting-in.
Post-Purchase Price Increases
The DOT’s new regulations strictly prohibit a carrier, agent or tour operator from imposing a price increase after taking a deposit unless the consumer explicitly agrees in writing to a price increase. 14 CFR 399.88; 14 CFR 399.89. The DOT recommends that a separate form be used to provide this disclosure and obtain signed consent. Once the consumer makes full payment, the rule prohibits imposing a price increase for any reason other than an increase in government imposed taxes and fees. Again, this is only permitted if the consumer affirmatively consents in writing to a price increase. To reserve these rights, we recommend that our clients receive a signed compliant disclosure form before taking an initial deposit.
If you have any questions about compliance with the new DOT laws, please contact Alexander Anolik or Jonathan Harriman at (415) 673-3333 or Contact Us.
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