The ultimate punishment? Internet travel agency faces record fine for advertising violations

keyboard1The online travel agency Ultimate Fares faces $600,000 in government fines for failing to include taxes and service fees in its airfares, a U.S. Department of Transportation Administrative Law Judge has ruled. The fine would be the largest ever assessed for advertising violations, according to regulators.

Ultimate Fares is no stranger to complaints. You don’t have to look far to find customers who call it “101% fraud” and accusing it of having a “very bad reputation.”

Elliott Advocacy is underwritten by Chubb. Chubb is the world’s largest publicly traded property and casualty insurance company, and recognized as the premier provider of insurance for successful individuals and families in the U.S. and selected international markets, offering coverage for high-value automobile, homeowners, recreational marine/aviation, valuables and umbrella liability coverage. As an underwriting company, Chubb assesses, assumes and manages risk with insight and discipline, and combines the precision of craftsmanship with decades of experience to conceive, craft and deliver the best insurance coverage and services to individuals, families and business of all size.

But now the government is taking action.

Not only is the agency looking at more than a half-million dollars in fines, but in an unprecedented move, Ultimate Fares’ owner, Roni Herskovitz, faces a $30,000 fine and would be barred from any involvement in the online air travel agency business for 12 months.

Do these charges look familiar?

An investigation by the Department’s Aviation Enforcement Office found that Ultimate Fares failed to include the federal excise tax and the service fee it charged to consumers in fares published on its website between March 2008 and September 2009.

This violated the Department’s requirement that published airfares must state the full price to be paid including service fees and any ad valorem tax, such as the Federal excise tax, which is assessed as a percentage of the fare.

Ultimate Fares continued to omit the tax from its stated fares even after the Enforcement Office began its investigation, according to the consent order issued by Administrative Law Judge Richard C. Goodwin. Ultimate Fares also failed to disclose which flights were being operated on a code-share basis as required by the Department’s rules.

In fact, they look familiar except the part about defying the DOT. That’s new to me.

What, exactly, did Ultimate Fares violate? The consent order (PDF) has those details:

In 14 CFR 399.80(f), the Department has stated that, as a matter of policy, it regards certain types of conduct by ticket agents to be unfair and deceptive practices or unfair methods of competition, including “misrepresentations as to fares and charges for air transportation and services connected therewith.”

This may not be the “ultimate” punishment. But it’s pretty darned close.

(Photo: rwmsn/Flickr Creative Commons)

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