North Van Hotel faces possible class-action lawsuit over drip pricing

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A customer who was charged an extra fee in a practice called drip pricing when he booked online with a North Vancouver hotel has launched a class-action lawsuit on behalf of all customers charged the fee.

James Kirkwood alleges the Lonsdale Quay Hotel charges a facility or property fee of around $12 a night that is added on to the nightly hotel room rates, according to the lawsuit filed in B.C. Supreme Court.

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The proposed class-action says such a fee violates two sections of the federal Competition Act, which was amended on June 23, 2022, to state additional fees other than taxes would “constitute a false or misleading representation.”

He’s seeking damages on behalf of anyone who has paid a facility or property fee at the hotel after June 23, 2022, and is asking the court to order the hotel refrain from drip pricing.

In an example cited in the case, with screen shots of the booking pages, the hotel’s website offered an executive room with two queen beds at $333.75 a night, before taxes, for what it called the “super save flexible rate.”

This price was repeated when the user clicked on the blue information button, but when he hit the reserve button, the next page showed a $12 a night charge, for a new price of $345.75, the claim said.

“The additional facility fee is an obligatory charge that is not imposed by an Act of Parliament or the legislature of a province,” it said.

Kirkwood is identified only as a B.C. resident and his lawyer Kevin McLaren at Hammerco Lawyers declined to comment.

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The lawsuit said Kirkwood booked a room on April 12 and stayed there from April 18 to April 19 for an average nightly rate of $228 plus a facility fee of $12.

It estimates the class consists of “at least 10s of thousands” of people who booked the hotel online.

It alleges the hotel represented a room rate, “which was not attainable due to the additional facility fee” and constitutes a false or misleading representation in contravention of Sec. 52 of the Competition Act.

And it contravened Sec. 54 of the Act by representing two prices for its room rate and charging the class members the higher rate, it said.

“Lonsdale Quay Hotel was only legally entitled to charge the first price” and the class members were entitled to pay the first price, and “suffered loss and/or damage equivalent to the amount of the facility fee,” it said.

Damages sought include the equivalent of the facility fee, plus costs to investigate and legal fees, it said.

“This false or misleading representing was made knowingly or recklessly” to increase its revenue, which violates the Competition Act, the claim said.

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The hotel manager said he wasn’t aware of the lawsuit and refused to comment.

None of the allegations in the claim have been proven in court and a class-action proceeding would have to be certified by the court to proceed.

The federal Competition Bureau’s website says, “drip pricing is the offer of a product or service at a price that is unattainable because consumers must pay additional non-government-imposed charges or fees to buy it.”

“It is when a company advertises a lower price to a consumer initially, then revealing (or “dripping”) additional, unavoidable fees on to the price as they go through the buying process, disclosing the real, higher full price until later in the buying process,” it says.

On June 23, 2022, when a ban on the practice passed into law, the government also increased fines for offences, of up to $750,000 (and $1 million for each subsequent violation) plus three times the value of the benefit derived from the deceptive concept for individuals.

And for corporations, up to $10 million (and $15 million for each subsequent violation), plus three times the value of the benefit derived from the deceptive conduct or three per cent of the corporation’s annual worldwide gross revenues, it said.

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It said the most common offenders are companies in the travel industry, including airlines that add baggage and seat selection fees, hotels that drop resort fees at the last minute and Airbnb listings that carry cleaning and service fees and taxes, event ticketing that add service, processing, delivery and instant download fees, new car dealers that add documentation, floor plan, preparation, advertising, destination, delivery or processing fees and any businesses that offer service or convenience.

Businesses that the Competition Bureau has taken action against are car rental companies, including Enterprise Rent-A-Car Canada, which was fined $1 million for what the bureau deemed misleading advertising when prices were not available to Canadian consumers. It has also laid a total of $5.25 million in fines against Avis and Budget and Hertz and Dollar Thrifty and Discount.

Also found to have violated the act were FlightHub, fined $5 million in part for hidden fees, Ticketmaster, StubHub and TicketNetwork and Airbnb, and Cineplex, the bureau said.

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