Order 2013

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

O n the Twentieth day o f August , 2013

Hipmunk, Inc.

Docket OST 2013

- 0004

Served August 20, 2013

Violations of 14 CFR 257.5(d) and 399.85(b) and

49 U.S.C. § 41712

CONSENT ORDER

This order concerns violations by Hipmunk, Inc., (Hipmunk) of 14 CFR 257.5(d) and 399.85(b) a nd the statutory prohibition against unfair and deceptive practices and unfair methods of competition , 49 U.S.C. § 41712. It directs Hipmunk to cease and desist from

future similar violations and assesses the ticket agent $ 30,000 in civil penalties.

Applicable Law

Hipmunk is a ticket agent 1 that arranges air transportation and is therefore subject to

detailed code

- share disclosure requirements found in 49 U.S.C. § 41712 (c) and

14 CFR Part 257

. Under section 41712(c), ticket agents are required to disclose the name of the operati ng carrier providing the service for each segment of a passenger’s itinerary “on the first display of the Web site following a search of a requested itinerary in a

format that i s easily visible to a viewer.” Failure to disclose the required information is an unfair and deceptive practice in violation of section 41712(a). In addition, 14 CFR

257.4 of the Department’s code

- share disclosure rule state s that the holding out or sale of

1 A “ticket agent” is defined as “ a person (except an air carrier, a foreign air carrier, or an employee of an

air carrier or foreign air carrier) that as a principal or agent sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for air transportation.” 4 9 U.S.C. § 40102(a)(45).2

scheduled passenger air transportation involving a code

- sharing arrangeme nt is an unfair and deceptive trade practice in violation of 49 U.S.C. § 41712 , unless, in conjunction with that holding out or sale, the ticket agent follows certain requirements, including

those of 14 CFR 257.5(d)

. The specific terms of section 257.5(d) require that print advertisements, including those published on the Internet, “prominently disclose that the advertised service may involve travel on another carrier,” “clearly indicate the nature of

the service in r easonably sized type,” and “identify all potential transporting carriers...by corporate name and by any other name under which that service is held out to the public.”

Violations of section 257 .5(d) constitute unfair and deceptive practice s and unfair

metho d s of competition in violation of 49 U.S.C. § 41712.

Hipmunk is also subject to the baggage fee disclosure requirements of 14 CFR 399.85(b),

which direct ticket agents to clearly and prominently disclose that additional fees for baggage may apply on the f irst screen in which the ticket agent offers a fare quotation for a specific it inerary selected by a consumer. The disclosure must indicate where consumers can view the applicable baggage fees. A ticket agent may refer consumers to

airline websites where specific baggage fee information may be obtained or elsewhere on its own site if it displays airlines’ baggage fees. This rule, which entered into effect on January 24, 2012, ensures that consumers are not deceived and are given accurate and complete inf ormation on which to base their travel purchase decisions. V iolations of section 399.85(b) constitute unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. § 41712.

Facts

An investigation by the Office of Aviation Enforcement and Proceedings (Enforcement Office) revealed a lack of compliance by Hipmunk with 14 CFR 257.5(d) and 49 U.S.C. § 41712(c). On its Internet website , www.hipmunk.com, Hipmunk failed to properly disclose the e xistence of code

- sharing arrangements when advertising code

share flights operated by a regional air carrier on behalf of a major air carrier. Specifically, Hipmunk did not display the corporate names of the transporting carriers and any other names under which those flights were held out to the public on its flight itinerary pages. As a result, consumers were unable to learn, at an early stage of the booking process, the identity of the airline that would actually operate the aircraft on which they would be flying. By failing to properly disclose such code

- share arrangements, Hipmun k violated 14 CFR 257.5(d) and 49 U.S.C. § 41712.

The investigation also revealed a lack of compliance by Hipmunk with section 399.85( b). Specifically , on the first screen in which a fare quotation for a specific itinerary is offered to consumers, Hipmun k failed to clearly and prominently disclose that additional fees for baggage m ight apply and where consumers could v iew the applicable baggage fees

. By failing to properly disclose baggage fee information, Hipmunk violated

14 CFR 399.85(b) and 49 U.S.C. § 41712.3

Mitigation

In mitigation, Hipmunk states that at the time the violations occurred, it did not consider itself to be a ticket agent within the meaning of 49 U.S.C. § 40102(a)(45) because it does not sell any tickets to consumers, or hold itself out as selling, providing, or arrangin g for air transportation; rather, visitors to hipmunk.com must purchase tickets directly from the participating airlines. Hipmunk states that because the Enforcement Office has

nonetheless concluded that Hipmunk’ s operation s constitute those of a ticket a gent, Hipmunk has revised its website to comply with the Department’s code

- share disclosure and baggage fees notice requirements and for present purposes will not contest the conclusion concerning its ticket agent status. Hipmunk, however, reserves the rig ht to challeng e that conclusion in the future. 2

Hipmunk states that prior to the Department’s review, baggage fees and code

- share

disclosures appeared on its website or the web sites of carriers. Hipmunk asserts that it found it difficult to modify its s ite to fully comply with the Department’s regulations due to the site’s unique presentation. Hipmunk states that , nevertheless, it was highly responsive to the Department during its investigation, providing a number of drafts of

enhanced disclosures to comp ly with the Department ’s regulations . Hipmunk notes that it has not received a single consumer complaint concerning these matters.

Hipmunk further explains that it was not able to display code

- share information for a small minority of itineraries bec ause of deficiencies in the code

- share data provided by data partners on whom Hipmunk is dependent for such information. Hipmunk states that due to the small number of itineraries not showing code

- share information, it was unaware of the issue until it re ceived notice from the Department. Hipmunk states that upon receiving notice, it promptly worked with its data partners so that code

- share information was shown for all itineraries. Hipmunk states that it will improve the monitoring of its website and its data feeds to ensure that it displays code

- share

information.

Decision

The Enforcement Office has carefully considered the information provided by Hipmunk

, but continues to believe en forcement action is warranted. The Enforcement Office and Hipmunk have reached a settlement of this matte r in order to avoid litigation. Without admitting or denying the violations describe d above, Hipmunk consents to the issuance of

this order to cease and desist f rom future violations of 14 CFR 257.5(d), 14 CFR

399. 85(b )

, and 49 U.S.C. § 41712

, and to the assessment of $ 30,000 in compromise of potential civil penalties otherwise due and payable pursuant to 49 U.S.C. § 46301.

The compromise assessment is appropriate considering the nature and extent of the

violations descr ibed herein and serves the public interest. It establishes a strong deterrent to future similar unlawful practices by Hipmunk and other ticket agents

.

2 The Enforcement Office believes that Hipmunk arranges f or the sale of air transportation and it receives commissions for doing so and therefore is a ticket agent covered by the Department’s rules.4

This order is issued under the authority contained in 14 CFR Part 1.

ACCORDINGLY,

1. Based on the above information, we approve this settlement and the provisions of this order as being in the public interest;

2. We find that Hipmunk

, Inc., violated 49 U.S.C. § 41712 (c) and 14 CFR 257.5(d) by failing to disclose code

- share arrangements as required ;

3. We find that Hipmunk

, Inc., violated 14 CFR 399.85(b ) b y fa ili n g to c l e a r l y a nd

p r omin e nt l y di s c lose on the f i r st w e b p a g e o f its w e bsite in whi c h it o f f

ere d a f a re quot a tion f or a sp ec i f ic itin era r y s e l ec t e d b y a c onsum e r th a t a ddition a l a i r line fe e s f

or b a g g a ge m a y a pp l y a nd wh er e c onsum er s c ou l d vi e w the a ppli ca b l e f ee s ;

4. We find that by engaging in the conduct described in ordering paragraphs 2 and 3, above, Hipmunk

, Inc., engaged in unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. § 41712;

5. We order Hipmunk

, Inc., its successors, its affiliates, and all other entities owned by, controlled by, or under common ownership and control with Hipmunk, Inc., its successors, its affiliates, and its assigns to cease and desist from further similar

violations of 14 CFR 257.5(d), 14 CFR 399.85(b)

, and 49 U.S.C. § 41712 ;

6. We assess Hipmunk

, Inc., $ 30,000 in compromise of civil penalties that mig ht otherwise be assessed for the violations described in ordering paragraphs 2 through 4,

above

. Of this total penalty amount, $15,000 shall be due and payable within thirty (30) days of the date of this issuance of this order. The remaining portion of th e civil penalty amount, $ 15 ,000, shall become due and payable immediately if, within one year of the date of issuance of this order, Hipmunk, Inc., violates this order’s cease and desist provisions or fails to comply with the order’s payment provisions, in which

case Hipmunk, Inc., may be subject to additional enforcement action for violation of

this order ; and

7. We order Hipmunk

, Inc., to pay the pen alty through Pay.gov to the account of the U.S. Treasury. Payments shall be made in accordance with the instructions contained

in the Attachment to this order. Failure to pay the penalty as ordered shall subject Hipmunk

, Inc., to the assessment of intere st, penalty, and collection charges under the Debt Collection Act and to further enforcement action for failing to comply with this

order.5

This order will become a final order of the Department 10 days after its service date unless a timely petition for review is filed or the Department takes review on its own

motion.

BY:

SAMUEL PODBERESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

An electronic version of this document is available at www.regulations.gov