Risk Management

Scammers and Poachers, Beware!

The Stop Online Booking Scams Act, legislation introduced before the U.S. Congress earlier this year, aims to protect both general consumers and meeting attendees from hotel-booking pirates.

Bad bookings are on the rise. In 2016, a poll from American Hotel & Lodging Association showed $3.9 billion in bad bookings in the U.S. alone.

Hoteliers call them scammers. Meeting organizers call them poachers, or pirates. They’re both talking about the same thing: third-party actors who deceptively insert themselves into the room-booking process by posing as either the actual hotel or an official housing provider. If you’re wondering why someone doesn’t do something about them, you might not have heard of the Stop Online Booking Scams Act, bipartisan legislation that’s been introduced in both houses of the U.S. Congress. 

Convene talked separately with Maryam Cope, vice president of government affairs for the American Hotel & Lodging Association (AH&LA), which has been active in advocating for enforcement against booking scammers; and Michael Owen, managing partner at Event-Genuity and past chair of the Events Industry Council APEX Standards Committee, which has collaborated with AH&LA on this issue, and produced a variety of resources on dealing with room-block poaching.

How did the Stop Online Booking Scams Act come about?

MARYAM COPE It came from a lot of industry concern about the rising number of guests showing up at front desks and calling [hotel] call centers  — either they didn’t have a reservation, or had some major problems with their reservation because they thought they were booking with the hotel, but in reality they were booking with a third party a third party that was posing as a hotel. It all started a couple of years ago when The New York Times did an investigation and found rising instances of this happening. And AH&LA was hit with a continuous ow of complaints from front-desk staff, from owners, particularly at our smaller hotels, but really across the board. The members of Congress had some interest in fixing this problem, and so they introduced legislation that would essentially protect the consumer from falling prey to the scam.

Just to give you a quick idea of this scam, it’s pretty extensive. [Scammers] have a multistep process where the consumer doesn’t know that they’re not booking with the hotel from beginning to end. The bad guys will squat on a URL that looks like it’s the hotel’s URL, like nationalreservationcenter.com/hotelbeachinn. It’ll take the actual name of the hotel and swallow it in the URL, and then you click on it and you get to a website that looks like the hotel’s website. It’ll have pictures, it’ll have a map, it’ll have a “call now” button. If you click on that “call now” button and the people pick up at the call center, they’re like, “National Reservation Center” — they never tell you you’re not at the hotel. And you give your credit-card number over to a third party. People will even get a confirmation email that makes it look like it came from that hotel.

MICHAEL OWEN There are three buckets when it comes to poaching. There’s competition, which you can’t fight. If somebody’s got a better deal or a better rate and you don’t do anything about it, then that’s the nature of the beast. Then there’s the unethical, and then it crosses over into illegal. So much of it is the unethical.

How big of a problem is this?

MC In the latest poll that we just had, there were 55 million bad bookings a year, translating to some $3.9 billion in bad bookings [in the United States]. Just to give you some more detail on those numbers, when I started at AH&LA three years ago, we did an independent consumer poll, and at that time, it was about 6 percent of consumers [who reported being the victim of an online hotel- booking scam]. That poll was redone in February [2017], and it’s now 20 percent of consumers who report that this has happened.

How does this usually play out at meetings and conventions?
MC
The conventions industry sees a spike in this every time they have a major event. The way the scammers do that is they somehow get ahold of the email addresses for conference attendees. We don’t know how or where or why, but they email these attendees a web link that takes them to a website that looks like an official housing provider for the event. And those people will book at this official housing provider, but it’s just some random third party that’s pretend- ing to be the convention-housing provider or the convention’s hotel. [Attendees who have booked a room this way] show up and the place is usually sold out, because there’s a convention there. So these people not only have to pay double, they end up finding lodging that’s like an hour or two away.

If this were the airline industry, this would not be stood for. If somebody were pretending to be Delta, all hell would break loose. But for whatever reason, I think it’s underreported, because people are either paying twice for a room or the hotel is comping them a room, so they don’t go think about it to complain.

MO The problem has gotten worse,not better. It’s fairly visible now, but doing research, you can go back and see it’s been fairly visible for 10 to 15 years.

What specifically does this legislation seek to do?
MC
It does two things. One is, it’s required that you notify the customer that the customer is on a third-party website. And if the website and the call center fail to do that, then they’re in violation of unfair and deceptive trade practices, which is enforceable at the federal level. The second thing it does, which is really important, is it empowers state attorneys general to go after these bad actors, because a lot of times the instances are local, like at a local convention or event, or, for example, in Montana the local surge in tourism they get for Yellowstone [National Park’s] summer season. We’ll get them the boots on the ground to be like, okay, this is happening in my state or my community, let’s go after these guys.

MO The problem is, you send cease-and-desist [notifications] and these people close and they open up somewhere else. There are some that have legitimate businesses, I guess — I use that term loosely — and there are others that operate out of a phone booth, metaphorically. So, cease-and-desist was only as good as when somebody could shut down their site and go somewhere else. [The new legislation] provides enforcement mechanisms. The way I say it is that if it can be clearly defined, then it would put teeth in those cease-and-desist letters.

Do you think the legislation will be passed during this congressional session?
MC
Yes, we are really hopeful for its chances. We’re going to continue to push hard. And I would encourage folks who are experiencing this scam to get in touch with AH&LA. We want to make sure their stories get to Congress and regulators and state attorneys general. It’s important for them to hear directly from people this is happening to.

ON THE WEB

› You can follow the progress of the legislation on a site like govtrack.us, where you can also sign up to get alerts. The legislation was introduced in the House as H.R. 2495 and in the Senate as S. 1164. 

For resources on dealing with room-block poaching from the Events Industry Council, visit eventscouncil.org/apex/roomblocks.aspx.

For information about the Stop Online Booking Scams Act from the American Hotel & Lodging Association, visit ahla.com/issues/online-hotel-booking-scams.

Christopher Durso

Christopher Durso is executive editor of Convene.