DOT Full Fare Advertising Rule

Introduction:

Every state has enacted consumer protection and deceptive advertising laws, each offering its residents unique protections.  However, in regards to airfare advertising by air carriers and their agents, these laws have been held to be completely preempted by the Airline Deregulation Act of 1978 in the U.S. Supreme Court’s decision in Morales v. T.W.A, 504 U.S. 374 (1992). 

 

This holding leaves the federal government with the exclusive job of ensuring that consumers “pay for what they get.”  This is done via the Full Fare Advertising rule, located at 49 U.S.C. §41712, with its implementing regulations at 14 C.F.R. Part 399. 

 

Unfair and deceptive practices and unfair methods of competition

(a) In General— On the initiative of the Secretary of Transportation or the complaint of an air carrier, foreign air carrier, or ticket agent, and if the Secretary considers it is in the public interest, the Secretary may investigate and decide whether an air carrier, foreign air carrier, or ticket agent has been or is engaged in an unfair or deceptive practice or an unfair method of competition in air transportation or the sale of air transportation. If the Secretary, after notice and an opportunity for a hearing, finds that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition, the Secretary shall order the air carrier, foreign air carrier, or ticket agent to stop the practice or method. 

 

49 U.S.C. § 41712.

 

Price advertising.

The Board considers any advertising or solicitation by a direct air carrier, indirect air carrier, or an agent of either, for passenger air transportation, a tour (i.e., a combination of air transportation and ground accommodations), or a tour component (e.g., a hotel stay) that states a price for such air transportation, tour, or tour component to be an unfair or deceptive practice, unless the price stated is the entire price to be paid by the customer to the air carrier, or agent, for such air transportation, tour, or tour component. 

 

14 C.F.R. Part 399.84

 

The Full Fare Advertising rule is investigated and enforced by the Department of Transportation, Office of Aviation Enforcement and Proceedings (http://airconsumer.ost.dot.gov). 

 

Description of the Law and its Requirements:

The Full Fare Advertising rule is a consumer protection law established to prevent and punish deceptive advertisements.  The rule mandates that whenever a carrier or their ticket agent states a price for air transportation, the full price be stated.  Put simply, the price advertised is the price that the customer must pay.  If this is not true and the total cost of the ticket exceeds the advertised price, then the advertisement is likely in violation.   

 

The Full Fare Advertising rule applies only to ads which quote a specific price for air tickets ($500 SFO-LON; Companion Flies “Free”).  The Rule also applies to tours which include airfare in the quoted price. 

 

The Full Fare Advertising Rule applies to all forms of advertising, including:

1) Print ads, such as flyers and leaflets, as well as newspaper and magazine ads;

2) Radio ads and webcasts;

3) Websites, including company homepages; and

4) Online ads (Google/Yahoo/MSN paid advertising, as well as banner ads). 

 

While the Department of Transportation requires that the total price to be paid by the consumer must be reflected in the quoted fare, governmentally imposed or approved taxes and fees may be excluded from the quoted fare if proper disclosures are provided.  These disclosures must be comprehensive and should give consumers a clear picture of the total cost of the air ticket.  Fees which are not imposed by the government (e.g. Fuel Surcharges or Service Fees) must be included in all advertised fares. 

 

Penalties for Violations:

The law provides for a maximum of $27,500 in civil penalties per day while the violation is ongoing.  There is a small business exception built into the law to reduce fines, but it has out-of-date requirements that are often exceeded in this modern era.  When a violation has been outstanding for weeks or even months, these penalties accumulate and violators are often faced with hundreds of thousands or even millions of dollars in potential fines. 

 

Not to fear, as the Department of Transportation has shown a strong preference to work with carriers and their agents in hopes of bringing first-time violators into compliance with reduced penalties.  It should be noted that the Department of Transportation has not been so easy on repeat violators and the Department has been known to use them to set examples for the industry. 

 

Recent Update:

Over the past year, there has been a crackdown on violations of the Full Fare Advertising rule which has resulted in numerous consent orders against air carriers and their agents.  The spike in oil prices in 2008 to just under $150 a barrel caused many carriers and agents to implement fuel surcharges.  Many carriers and agents passed along these surcharges to consumers improperly which resulted in a wave of consent orders carrying substantial fines. 

 

Furthermore, there is still a good deal of confusion regarding government taxes and fees.  Many carriers and agents provide incomplete or out-of-date disclosures.  This has also led to investigation and enforcement by the Department of Transportation.  

 

Contact:

If you have any questions concerning the Full Fare Advertising rule, please contact us.