Order 2013

- 12

- 7

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

On t he Thirteenth day of December , 2013

Laurus T rav e l Inc orporated
, d/b/a

Laurus Travel

Docket DOT

- OST 2013

- 000 4 Violations of 49 U.S.C. § 41712 and

14 CFR Part 399

Served December 13 , 2013

CONSENT ORDER

This consent order concerns advertisements by L a u r us T rav e l Inc orporated

, d/b/a Laurus

Travel (collectively Laurus Travel )

, that violate the Department’s requirements specified

in Part 399 o f the Department’s regulations, and constitute unfair and deceptive trade practices in violation of 49 U.S.C. § 41712. An investigation by the Department’s

Off ice of Aviation Enforcement and Proceedings (“Enforcement Office”) revealed that

, prior to January 26, 2012, Laurus Travel advertised air tour packages whose prices did not meet Department requirements under Part 399, because they failed to include all fuel surcharges, failed to state that the prices were subject to post

- sale price increases, and

failed to provide proper disclos ur e that significant restrictions were applicable . The

advertisements also failed to provide ap propriate notice of the existenc e, nature and amount of other charges and additional taxes and fees that

, until January 26, 2012, were permitted to be stated separately from the base fare. Moreover, the prices listed in the

Laurus Travel ’s advertisements for air

, l and and cruise package s published after January 26, 2012, continued to state that the prices were subject to post

- sale price increases even after final payment. Those advertisements violated 14 CFR 399.84 (a), 399.88 and

399.89. This order directs Laurus Travel to cease and desist from future violations and assesses the company a c ompromise civil penalty of $ 26 ,000. Applicable Law2

Laurus Travel , as a ticket agent selling air tour packages, including air and hotel packages, is subject to the advertising requ irements of Part 399 of the Department’s

rules. Under Part 399

, any advertising that states a price for air transportation or an air tour is considered to be an unfair or deceptive practice in violation of 49 U.S.C. § 41712 unless the price stated is the entire price to be paid by the customer to the air carrier or ticket agent for such air transportation, tour or tour component.

Prior to January 26, 2012, 14 CFR 399.84 required fare advertising to state the full fare

. H owever, as a matter of enforcement policy, the Department permitted air carriers and agents to state separately from the advertised price taxes and fees imposed by a

government on a per

- passenger basis, such as passenger facility charges, so long as their amounts appeared or wer e indicated clearly in the advertisement so that the consumer could determine the full price to be paid. 1 On the other hand, carrier

- or agent

- imposed surcharges, e.g., fuel, insurance, and service charges, or other such costs, always had to

be included i n the advertised price. 2 Moreover, w hen an air t our seller or carrier

advertised a specific price for a flight, air tour or component, it had to have on hand a reasonable inventory at the advertised price for a reasonable time period. 3

On April 25, 201 1, the Department issued a set of rules designed to enhance protections for air travel consumers that, among other things, required airlines and ticket agents to

co mply with the Department’s full fare adverti sing rule as written. The revised full fare

rul e mandates that the price advertised for passenger air transportation include all

government

- imposed taxes and fees and all mandatory airline

- and ticket agent

- imposed surcharges and fees in every advertised fare or price for either a flight or an air tour

. 4
This provision was codified in 14 CFR 399.84(a), which took effect on January 26,

2012. 5

1 See, e.g., Costa Cruise Lines, N.V., Order 2009

- 9

- 3

, (September 3, 2009).

2 See, e.g.

, British Airways , Order 2012

- 10

- 1, (October 1, 2012); Tour Beyond, Inc., d/b/a China Spree , Order 2011

- 1

- 6

, (Feb. 9, 2011) , and orders cited there in

.

3 AirT ran Airlines , Order 2010

- 5

- 29

, (May 28, 2010).

4 Although charges included within the single total price listed, e.g., government taxes, may be stated separately or through links or “pop ups” on web sites that display the total price, such charges may not be false or misleading, may not be displayed as p rominently as the full fare, may not be presented in the same or larger size as the total price, and must provide cost information on a per passenger basis that accurately reflects the cost of the item covered by the charge.

5 The Department’s long

- stan ding prohibition on omitting carrier

- or agent

- imposed charges, such as fuel surcharges or convenience fees, from advertised fares, including “free” fares, was also codified in section 399 .84 (a)

. Enhancing Airline Passenger Protections , 76 Fed. Reg. 23110 (Apr. 25, 2011).3

As under the prior rule, significant restrictions, such as double occupancy ( at times with identical itinerary requirements ) , single supplements, cash only prices, and conditions on availability must be disclosed prominently and proximately to the pertinent advertised

fares. 6

In addition, under the new rules, in section 399.88, the seller may not add or increase

taxes and government fees after th e consumer has paid in full unless notification has been given and the consumer’s written consent obtained before full payment. Once full payment has been made, other price increases are prohibited. Under section 399.89, similarly, the seller must provid e notification and obtain the consumer’s written consent

before any payment is made in order to be permitted to increase the price later, for example, by means of an added fuel surcharge. Violations of section s 399.84 (a) , 399.88

and 399.89 (and the previo us full fare rule, section 399.84) constitute an unfair and deceptive practice and unfair method of competition in violation of section 41712.

The Enforcement Office investigation of Laurus Travel dis co ver ed violations under the

earlier rules in effect p rior to January 26, 2012 as well as later violations under the revised Department rules that continued through March 2013.

Background and Relevant Facts

Laurus Travel is a ticket agent, based in Vancouver, Canad a, that specializes in offering

to North Americans travel packages 7 which include airfares, hotel accommodations, guided tours, and related amenities, particularly to China and other countries in the Far

East

. Laurus Travel has promoted its air travel packages through e

- mail solicitations, subscriptions, and advertisements that are published on its web sites, including

www.LaurusTravel.com , and others.

Prior to January 26, 2012, numerous advertisements published by Laurus Travel on its

website and other sites failed to meet Department requirements that all advertising state

6 British Airways, Order 2012

- 10

- 1 (Oct. 1, 2012 ). See also Lion World Travel d/b/a South African Airways Vacations , Order 2010

- 9

- 5 (Sept. 3, 2010) and Unique Vacations, Inc., Order

2010

- 11

- 7 (Nov. 8, 2010).

7 Section 399.84 (a) applies to ticket agents that hold out air transportation, or air tours to, from, or within the United States to U.S. consumers through the Internet and other media. To

determine whether an Internet advertisement is marketed to U.S. consumers, the Enforcement Office considers a number of factors, including whether fares are displayed or payable in U.S. dollars and whether sales can be made to persons with addresses or telephone numbers in the

United States. Laurus Travel advertises air travel packages that originate at and return to numerous American gateways and quotes its prices in U

. S

. dollars based on th e gateway used

. See 734758 On tario, Limited, d/b/a FlightNet

- work.com, Order 2012

- 10

- 4

, (Oct. 5, 2012). See

also “Answers to Frequently Asked Questions Concerning the Enforcement of the Second Final Rule on Enhancing Airline Passenger Protections (EAPP #2),” Dated January 11, 2012,

available at http://airconsumer .ost.dot.gov /rules/g uidance.htm.4

the entire price to be paid by the consumer. Among other problems, the advertisements did not properly disc lose the existence, nature and amount of other taxes, charges and fees that the consumer would have to pay for the air transportation or air tour , but that, under the rules then in effect, were permitted to be stated separately from the base fare

. 8
The Enforcement Office informed Laurus Travel of these apparent violations.

For a significant time period following January 26, 2012, Laurus Travel published daily

advertisements on its own and other web sites

, promoting air tour packages, combining

air fares, hotel

, cruises, land tours, and related amenities. However, the prices advertised by Laurus Travel for its air package tours d id not indicate that numerous significant r estrictions appl ied . The prices we re cash only prices (except for the initial deposit)

, and were based on double occupancy

. S ervice and/or booking fees also were not included

.

Infor mation warning a consumer that subsequent fuel or service surcharge s m ight be impo sed could be uncovered on the Laurus Travel web site only if the reader sc ro ll ed down the tour advertisements’ main pages to a group of subtitle d hyperlinks listed in the fine print area, and cli cked the link

, “Terms & Conditions.”

When selected , that hyperlink carrie d the reader to anothe r page where t he consumer

wa s informed for the first time that

, under the applicable Terms and Conditions, fuel surcharges m ight be added to the trip cost and we re subject to increase even after final

payment. 9 Laurus Travel did not comply with the requirement s prohib i t in g price

increase s after full payment a s contained in sections 399.88 and 399.89

.

Thus, the air tour package s promoted in Laurus Travel’s web site advertisements

did not compl y with the Department’s full

- fare advertising rule, 14 CFR 399.84

, in

effect prior to the January 26, 2012 revision, or subsequently with 14 CFR 399.84(a)

, 399.88 and 399.89

. In addition to violating the requirements of Part 399

, and related

8 See Allegiant Air, LLC, Order 2012

- 2

- 10 (Feb. 15, 2012)

, and Notice: “Disclosure of

Additional Fees, Charges and Restrictions on Air Fares in Advertisements, Including

"Free" Airfares ,” dated September 4, 2003

. Nor was there, as then required, in the alternative, a prominent reference or hyperlink, located proximately to the initial advertised price, which took the reader to a statement detailing the existence, nature and amount of applicable taxes and government fees that could properly be excluded from the quoted price.

9 For example, on January 17, 2013, the following limitation s w ere found: “ If the airlines or cruise operators increase or impose new taxes, levies or fuel surcharges after your payment has been paid, we will pass on such charges to you by way of a

new invoice. ” The practice of imposing increased air taxes and surcharges wa s not permitted under Department enforcement policy

, even before the January 26, 2012, effective date of the regulations prohibiting post

- purchase price increases. S ee Grand Circle Travel Corp., Order

2006

- 7

- 23 (July 20, 2006); and the Department’s regulations, Enhancing Airline Passenger

Protections

, supra

. The Terms and Conditions also state that the tour price excludes “Local air taxes and surcharges. . . ..”5

Department precedent, such practices constitute an unfair and decep tive trade practice in violation of 49 U.S.C. § 41712.

Statement in Mitigation

In mitigation and explanation, Laurus Travel state s that it supports the Department’s efforts to protect the public from deceptive advertising practices. As a Canadian travel company serving mostly Canadians, Laurus Travel affirms that it was unaware of the applicable regulations in the United States. Laurus Tra vel declares that u pon receipt of the Department's initial investigation letter

, i t immediately contacted the Alliance of Canadian Travel Agencies (ACTA) to inquire about the applicability of United States regulations to foreign agencies. Laurus Travel re calls that ACTA initially advised Laurus Travel that the United States regulations do not apply to Canadian travel agencies. Thus, Laurus Travel

decided to continue to m aintain its prior practices even after the Department issued new

rules that went into effect in January 2012.

Laurus Travel further states that it has had a “full disclosure and no

- hidden

- cost policy ” and

has never received a single consumer compl a int related to its advertising of air travel packages. The firm believes that its policy h as been effective. Nevertheless, as part of this settlement, the firm recounts that it later took the actions necessary to comply with the Department’s regulations and brought its website and other practices into compliance. Laurus Travel avows that und er the circumstances, its divergence from the Department’s advertising regulations was not intentional, and that the firm undertook good faith cooperation with the Department and ultimately corrected its omissions

.

Findings and Decision

The Enforcement Office has carefully considered all of the information available to it, including that provided by Laurus Travel , but continues to believe that enforcement action is warranted. In order to avoid litigation, the Enforcement Office and Laurus

Tr avel have reached a settlement in this matter. While neither admitting nor denying the above allegations, Laurus Travel accepts the findings and conclusions stated herein in order to avoid potential litigation

, and agrees to cease and desist from furthe r violations

of 14 C.F.R. 399.8 4

, 399.88

, and 399.89, and 49 U.S.C. § 417 1 2 . Under this order,

Laurus Travel is assessed $ 26 ,000 in compromise of potential penalties otherwise assessable under the provisions of 49 U.S.C. § 46301.

Failure to pay the asses sed penalty may subject Laurus Travel to additional enforcement action for the failure to comply with this order. The Enforcement Office believes that the assessment of a civil pena lty of $ 26 ,000 is appropriate in light of the nature and

extent of the vio lations in question and will provide an effective deterrent to unlawful conduct in the future by Laurus Travel and other sellers of air transportation.

This order is issued under the authority contained in 49 CFR Part 1

.6

ACCORDINGLY,

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

2. We find that prior to January 26 , 2012, Laurus Travel Incorporated violated

14 CFR 399.84 as described above, by causing to be publishe d advertisements that failed to state the entire price to be paid by the consumer to the firm for certain air transportation , and by requiring paymen t of additional fees and charges after the consum er had paid the advertised price ;

3. We find that beginning on January 26, 2012, Laurus Travel Incorporated

violated 14 CFR 399.84(a), 399.88 and 399.89 , as described above, by causing to be published advertisements that failed to state the entire price to be paid by the

consum er to the firm for certain a ir transportation and by requiring payment of additional fees and charges after the consumer has paid the advertised price ;

4 . We find that by engaging in the conduct described in paragraph s 2 and 3

, above, Laurus Travel Incorporated engaged in an unfai r and deceptive practice in violation of 49 U.S.C. § 41712;

5

. We order Laurus Travel Incorporated and all other entities owned and controlled by, or under common ownership and control with Laurus Travel Incorporated, and their successors and assignees, to cease and desist from futur e violations of 14 CFR 399.84

, 399.88

, and 399.89, and 49 U.S.C. § 41712;

6

. Laurus Travel Incorpo rated is assessed $ 26 ,000 in compromise of civil penalties that might otherwise be assessed for the violations found in ordering paragraphs 2 through 4 of this order. Of t his total penalty amount , $4

, 0 00 is due and payable within 15 days of the date of issuance of this order

. Of t he remaining $22 ,0 00 , six payments of $1500 each shall be due and payable as

follows: one payment each on February 1, 2014; May 1, 2014, August 1, 2014; November 1, 2014; February 1, 2015, and May 1, 2015. The remaining, $13,000

shall be come due and payable if, within eighteen months following the date of issuance of this order, Laurus Travel Incorporated violates this order’s cease and desist or payment provisions, in which case the entire sum will become due and payable immediately ;

7

. Failure to pay the compromise assessment as ordered shall subject Laurus Travel Incorporated to the assessment of interest, penalty, and collection charges under the Debt Collection Act, and to possible further enforcement action for failure to comply with this order; and7

8 . We order Laurus Travel Incorporated to pay the penalty through Pay.gov to the account of the U.S. Treasury. Payment shall be made in accordance with the

instructions contained in the Attachment to this order

.

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

BY:

SAMUEL PO D BERESKY

Assistant General Counsel for

Aviation Enforcement and Proceedings

An electronic version of this document is available

at www.regulations.gov