Seattle-based law firm Hagens Berman has filed a nationwide class-action lawsuit against Expedia, alleging that the hotel booking site Reservations.com — which is supplied by Expedia — falsely inflated taxes and fees on hotel stays so that Expedia could profit.
According to the complaint, consumers saw a line-item service fee and a “tax recovery” charge on their bills, the latter described by the lawsuit as payments that should reflect taxes hotels pay to governments. Hagens Berman gives an example: on a room rate of $159 the site added $50.88 in tax recovery charges and fees. In Seattle, the combined state and local hotel tax is 15.6 percent plus $2 per night, so a two-night stay would require taxes and fees of about $27. The firm says the remaining $23.88 was retained by Expedia.
“While Expedia takes an under-the-table cut through its deal with Reservations.com, consumers are left completely in the dark, unknowingly paying inflated costs disguised as ‘taxes and fees,’” said Steve Berman, managing partner and co-founder of Hagens Berman. “Any reasonable consumer would assume this to be a government-regulated hotel tax, and that’s exactly what Expedia has banked on and profited from, for years.”
The lawsuit seeks to recover the alleged overpayments and return them to consumers who booked and paid for hotel rooms through Reservations.com since 2014. It further alleges violations of state laws, including claims of conversion and unjust enrichment, arguing that Expedia improperly retained money presented to consumers as taxes and fees.