Billings Gazette: Daines takes on hotel booking fraud

Mike Nelson had a problem. People without reservations at his posh Northern Hotel kept showing up at the front desk insisting they had booked a room online.

They were furious when they were told there was no booking, even more so on the occasions when the downtown Billings hotel had no vacancy.

The problem was online booking agencies, with no affiliation whatsoever with the Northern, wrongfully charging customers and never booking rooms. The booking sites used the details scraped from the Northern’s website to make it appear like they represented the hotel.

There were so many third party booking sites, some legitimate, some not, that the Northern’s actual webpage bumped to fifth on Google searches, Nelson said Tuesday, during a meeting with U.S. Sen. Steve Daines, R-Mont.

“The first four are Expedia affiliates. One is Reservation Counter. One says Northern,” Nelson said. That last site isn’t affiliated with the hotel, but that didn’t stop them from suggesting they were when Nelson called.

“They answered and said ‘Northern Hotel, thank you for calling,” Nelson said. ”And it wasn’t us. I said, ‘Am I speaking with the Northern Hotel?’ there was a lag.”

At the request of Montana hotel owners, like Nelson, Daines is carrying a bill to crack down on phony booking sites. The senator met in Billings on Tuesday with hotel owners from around the state, and also a representative from the Travel Industry Association of America.

Tourism is big business in Montana, according to Voices of Montana Tourism, a trade group. Last year, 11.7 million people visited Montana and spent $3.6 billion while they were here. 

Phony online booking sites have become a major problem for hotels in Montana and elsewhere. Hoteliers say they cannot live without online bookings. Nearly three quarters of all hotel reservations are made online. They also cannot live with customers burned by bogus reservations.

Inevitably, those scammed customers associate the hotel with their bad experience, said Steve Wahrlich, owner of the Best Western Clocktower Inn in Billings. Wahrlich recalled one man who tried to check in only to find that he had no reservation and that the Clocktower Inn had not received payment.

“So this guest basically made a pre-paid reservation at a fictitious website that had scraped our information. And the guest was out,” Wahrlich said. “We charge the guest 50 percent, and I thought that was being nice. I didn’t have to do anything. But that guest was extremely upset at us.”

Nationally, there are 13 million booking scams a year, translating into $1.3 billion in losses, according to the American Hotel and Lodging Association.

“That’s the direct loss, when you tally up these transactions, not to mention the indirect loss where someone comes to Steve and that customer is really upset even though Steve had nothing to do with it,” Daines said.

Daines said he’s already receiving bipartisan support on the Senate Commerce Committee for his bill, the Stop Online Booking Scams Act of 2016.

The bill would make it illegal for any third party to run a booking site without disclosing that they are a third party not affiliated with the hotel.

Daines wants the Federal Trade Commission to make it easier for consumers and businesses to report bogus sites. Violating the terms would break Federal Trade Commission law. He also wants the FTC to report scam site operators to state attorneys general for prosecution.

“It would make it unlawful for a third party online hotel reservation seller who is not affiliated with the hotel to accept payment for a reservation unless the seller discloses that they are not affiliated with the hotel,” Daines said.

The ranking member of the Commerce Committee, Sen. Bill Nelson, D-Fla., is a co-sponsor of the bill, Daines said, which gives the proposal a better chance of passing.