Chapter § 5.03 FALSE, MISLEADING AND DECEPTIVE ADVERTISING IN THE TRAVEL INDUSTRY
| Jurisdiction | United States |
| Publication year | 2021 |
§ 5.03 False, Misleading and Deceptive Advertising in the Travel Industry
[1] Introduction to Travel Industry Advertising
In litigating false, deceptive and misleading advertising claims, it is important to understand how travel services are marketed and delivered to the general public. Once understood, plaintiff's counsel will be able to intelligently (1) select viable, liable and available defendants, (2) determine appropriate theories of liability and damages, (3) assess the enforceability of disclaimers, forum selection clauses, arbitration clauses and choice of law clauses and (4) anticipate dismissal motions based upon a lack of jurisdiction, forum non conveniens, choice of law and the application of the Foreign Sovereign Immunities Act, the Warsaw Convention, the Athens Convention and so forth.
[2] How the Travel Industry Works
The travel industry markets travel services delivered by travel suppliers. Many travel suppliers, e.g., airlines, hotels, cruise lines, rental car companies, theme and amusement parks, have their own distribution systems and market directly to the public through advertising, toll free "800" reservations numbers and the Internet.119
However, travel suppliers may market their services through travel intermediaries such as tour operators, public charter tour operators, consolidators, travel agents, pseudo travel agents, independent contractors, outside sales agents, telemarketing "boiler rooms," time share promoters, travel clubs and informal travel promoters. Each of these entities markets travel services using the travel supplier's brochures and/or uses its own brochures describing, for example, the component parts of a seven day/eight night tour to the Greek Islands featuring round trip air transportation, hotel accommodations for two days, a five day cruise and tours of local sites. Lastly, travel agents may orally misrepresent the nature of the travel services to be delivered by travel suppliers and tour operators and vouch for the willingness, financial stability and reliability of recommended travel suppliers and tour operators.
[3] The Methods of Travel Advertising
Travel suppliers such as hotels and resorts,120 cruise lines121 and tour operators122 create multi-colored brochures and distribute them directly to consumers or to travel agents. These brochures can be seductive and may contain actionable misrepresentations. Suppliers and tour operators also use television,123 radio,124 newspapers, direct mail,125 telephones,126 Internet e-mails127 and fax transmissions.128
[4] State and Federal Regulation of Travel Advertising
Travel advertising is subject to regulation through: (1) state consumer protection statutes, (2) state and federal telemarketing statutes, such as the Telephone Consumer Protection Act,129 (3) the Federal Trade Commission (FTC), (4) the Department of Transportation (DOT),130 (5) the "Sellers of Travel" statutes enacted by several states,131 (6) the Lanham Act132 and the Trademark Act.133 In addition, all but four states require travel agents to be licensed to sell travel insurance.134
[5] Deceptive and Misleading Travel Advertising
[a] What Is Puffing?
It is not uncommon for travel advertising to use superlative language in describing the services and facilities offered: the "greatest," "special," "first class," "beautiful," "luxurious," "exquisite," "the best in the world," "guarantee of departure,"135 "quality and safe resorts," "dependable," "3 sun hotel" and delivering "more personalized service" and "assure a smooth and comfortable trip." Whether these superlatives are mere puffing136 or actionable misrepresentations will depend on just how bad the actual accommodations or facilities are. Such superlatives may be sufficiently misleading and deceptive to be actionable under State consumer protection statutes such as New York's General Business Law §§ 349 and 350.137
[b] What Is First Class?
The term "first class" as it relates to hotel accommodations has common law signif- icance.138 In comparing hotels in "bait & switch" cases, however, a hotel rating such as "Superior First Class" may be difficult to define.139 In cruise cases, however, some courts seem willing to ascribe meaning to the term "First Class."140 Regarding airlines, the term "First Class" has lost its significance.141
[c] Actionable Misrepresentations
There are a variety of misrepresentations used in travel advertising. The causes of action most commonly used in travel misrepresentation cases are
(1) negligent misrepresentation 142
(2) fraudulent misrepresentation 143
(3) promissory estoppel 144
(4) violation of state consumer protection statutes 145
(5) violation of state sellers of travel statutes 146
(6) breach of fiduciary duty 147
(7) violation of federal Telephone Consumer Protection Act 148
(8) violation of FTC, DOT and EU advertising rules 149
(9) violation of antitrust statutes 150
(10) violation of dram shop statutes. 151
[6] Federal Law Preemptions
Federal law preempts some state law claims against airlines, public charter tour operators, travel agents and cruise lines.
[a] Airlines, Tour Operators and Travel Agents
The Supreme Court has held that the Airline Deregulation Act (ADA)152 and the Federal Aviation Act (FAA) preempt state statutory and common law claims which "relate to rates, routes or services of any air carrier."153 This means that state law cases may now be removed to federal court,154 and/or may be dismissed on the grounds that the FAA has primary jurisdiction over a particular claim155 or there is no private right of action under the FAA for the claims asserted.156 The Supreme Court also held that statutory consumer fraud claims are preempted by the ADA.157 With varying results, the courts have addressed the preemption issue in cases involving false, deceptive or misleading advertising.158
In addition, the Warsaw and Montreal Conventions159 govern claims arising from international air transportation and preempt common or statutory law regarding the rights, responsibilities and liabilities of the parties and may preempt state consumer protection statutes.160
[b] Cruise Lines
Unlike false, deceptive and misleading advertising claims against the airlines, similar statutory consumer protection claims may be brought against cruise lines without being preempted.161 However, maritime law does preempt some consumer claims. For example, New York State requires consumer transaction contracts to be "printed . . . clear and legible [in print] eight points in depth or five and one-half points in depth for upper case type [to be admissible] in evidence in any trial."162
The microscopic terms and conditions in passenger tickets163 are, clearly, meant to be unreadable and invisible. In fact, maritime law, which governs the rights and remedies of cruise passengers,164 preempts all state laws requiring consumer contracts to be in a given type size.165 In addition, the terms and conditions in passenger tickets may be enforceable even though the passenger can neither read nor understand the language in which the tickets are printed.166 And lastly, some courts, but not all167 will not incorporate misrepresentations which appear in cruise line brochures and upon which consumers rely into the passenger's contract of passage with the cruise line.168
[7] Misrepresentations: Private and Public Lawsuits
[a] Airlines
Misrepresentation claims against airlines may be asserted in consumer lawsuits,169 by state agencies,170 by the D.O.T. in enforcement proceedings171 or the issuance of industry letters,172 typically, involving claims preempted by the ADA and FAA.
[b] Cruise Lines
Misrepresentation claims against cruise ships run the spectrum from failing to honor the promised itinerary to deceptive port charges.173
[c] Rental Car Companies
The misrepresentation claims against rental car companies include failing to deliver the promised vehicle, phony charges for value added taxes and overcharges for collision damage waivers, replacement gasoline and personal accident insurance.174
[d] Hotels and Resorts
Failure to deliver promised services, facilities and food, deceptive room service charges and overbooking and price overcharges175 are just some of the allegations levied against hotels and resorts.
[e] Resort Time Shares
The misrepresentation claims against resort time sharing facilities run the spectrum from failing to deliver promised facilities and services to financial bust out schemes.176
[f] Tour Operators
Actions against tour operators may be asserted in consumer lawsuits177 or by the D.O.T. (Public Charter Tour Operators)178 and by the F.T.C. in enforcement proceedings or in lawsuits179 by suppliers180 or competitors.181
[g] Travel Agents
Misrepresentation claims against travel agents may be based upon affirmative misrepresentations182 or failures to reveal material facts183 or a breach of fiduciary duty.184 In addition, state and federal agencies may file criminal charges and/or civil complaints for travel swindles and violations of state Travel Seller statutes.185 Travel agents have a duty to discover and disclose information which their customers need. A failure to do so amounts to an actionable omission and supports a cause of action for breach of fiduciary duty.186
[h] Travel Clubs
In a case before a District Court in New Jersey,187 the "Plaintiffs allege that the Travel Club Defendants were involved with fraudulent travel clubs and swindled Plaintiffs . . . by convincing [them] to buy memberships in the various travel clubs. . . . The specifics of the scheme alleged are as follows. The Travel Club Defendants sell memberships . . . and promote 'exclusive and substantial discounts for travel-related services' but Plaintiffs state that 'the promised discounts and other rewards simply do not exist.' . . . On these mailings 'Defendants falsely employ the trademark . . . of well- known . . . business enterprises, including Jet Blue Airlines." The Court...
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