On travel sites, the pre-checked box checks out

The pre-checked box, a clever technique that travel companies use to extract a few dollars more from customers booking their trips online, may be checking out.

Last month, the Minnesota Department of Commerce alleged that National Union Fire Insurance and Travel Guard Group had violated state law by automatically enrolling consumers in travel insurance without their express consent when they booked on Travelocity.com.

Unless they specifically opted out of the insurance, customers were buying policies that cost $25 to $45 per traveler, according to the state. The companies have agreed to issue nearly $2.5 million in refunds and pay a $250,000 civil penalty.

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And in January, the Transportation Department’s new full-fare advertising regulations for airfares went into effect. They include a rule that prohibits so-called opt-out provisions in ads, further closing a loophole that had cost consumers millions and generated thousands of complaints.

No surprise, then, that online agencies are slowly backing away from the practice.

“Opt-outs are no longer being presented to consumers via our member companies to the extent that they were offered before,” says Joseph Rubin, president of the Interactive Travel Services Association, which represents the major online travel agencies, including Travelocity.

To get a sense of what was wrong with opt-out, let’s rewind to a 2010 column of mine on this subject. In it, I spoke with customers who booked airline tickets online only to discover that a box indicating that they also wanted to buy optional travel insurance had been pre-checked. I interviewed Terri Widder, a retiree from Carol Stream, Ill., who bought American Airlines tickets through a site operated by Travelocity. She nearly ended up with precisely the same insurance that Minnesota took action against: a Travel Guard policy.

At the time, a Travel Guard spokesman said that opting out instead of in was well on its way to becoming a “standard” in travel. He told me that the complaint rate on the company’s policies had been less than one-tenth of 1 percent.

A Travelocity representative also said that most of its customers — more than eight in 10 — uncheck the box before they click the “buy” button. If they had buyer’s regret, the site allowed for a refund within one credit card billing cycle.

Travelocity declined to comment on the Minnesota ruling, because it was not party to the settlement. (The online agency made its decision about opt-out marketing in consultation with the travel insurance companies, but the insurers approved the way in which their products were sold, according to Travelocity.) But the agency defended its opt-out practices.

“Travelocity believes that our 16-year track record of providing great values for consumers and being their advocate speaks for itself,” says Joel Frey, a company spokesman. “We viewed pre-checking travel insurance as a service to our customers, and we rarely received any complaints about it. We went out of our way to ensure that the manner in which we did that was not deceptive to our customers.”

Although Travelocity no longer asks its customers to opt out of purchases, Frey says that the practice benefitted travelers because it allowed them to “give greater consideration to the need for travel insurance, something we believe they tend to undervalue until they need it.”

But Minnesota’s actions, plus the recent federal ruling, probably mean that other states will consider similar actions against the opt-out box, says John Cook, president of QuoteWright.com, a travel insurance site.

“Tour operators, travel agents, motor coach operators and cruise lines that use the same marketing method for travel insurance could put the insurance company at risk for a deceptive practice,” he says. “My gut reaction is that we’ll see more enforcement actions from other states and involving other companies.”

It could spread to other industries, too. When’s the last time you tried to sign up for a “free” offer online, only to find that the radio button signing you up for the company’s newsletter had been pressed, too? Pre-checking is done almost everywhere, though not to the same level as in online travel.

I agree with Travelocity that more people should consider insurance when they travel, but making them opt out isn’t right. I’m also certain that making customers uncheck the box was profitable to companies selling travel online and that at some level money, and not the welfare of their customers, was a driving motivator.

Travel companies are constantly innovating and pushing the boundaries, and if they can figure out a way to nudge you into making an online purchase while not breaking the law, they’ll try. I can’t see what’s behind the firewalls of the usual suspects — the discount airlines and tour operators whose business models depend on deception — but I wouldn’t put anything past them.

The only way to ensure that opt-out is properly euthanized is to hammer away at it whenever you see it. If you find yourself paying for something you don’t want, it’s not enough to get your money back. Send an e-mail to the Department of Transportation, the Federal Trade Commission or your state insurance commissioner. Tell them what happened.

Opt-out marketing is a deceptive practice, according to the federal government. It’s up to us to keep up the pressure until it goes away.