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Hotel Booking Scams A Much Bigger Problem Than Previously Known

The problem of “rogue” hotel booking websites is bigger than previously known and is creating enormous problems for both travelers and the hotel industry.

A recent survey done for the American Hotel & Lodging Association found that 6 percent of travelers who had booked a room online thought they were booking directly with the hotel, but later found out they had used an imposter site. Based on this survey, the group estimates 15 million hotel bookings were done on rogue websites last year with $1.3 billion going to these fraudsters.

Prior to this survey, the group estimated the problem to be much smaller: about 2.5 million hotel bookings a year.

Welcome to Japan’s Robot Hotel 1:01

“It’s just astounding,” said Maryam Cope, the association’s vice president of government affairs. “Travel and tourism is a growth industry and online booking is a huge success. Whenever there’s success, the scammers come out of the woodwork and try to prey on consumers, and I think that’s why we’re seeing such large numbers.”

The rogue sites are cleverly designed to look like the hotel’s site or a legitimate online travel agency. The scammers who run these bogus sites hijack the name, logo and even real pictures of the hotel. Their URL typically includes the hotel’s name, so it will pop up when you do a search.

The creators are so good that the Better Business Bureau reports that even the savviest travelers have fallen for this scam.

“Some sites even include a ‘call now’ button staffed by call center employees who have a whole script to hide the fact that they aren’t actually with the hotel of choice,” Mary Power, the BBB’s president and CEO. wrote in a blog post this summer. “These bad players are extremely skilled in the art of deceiving unsuspecting consumers.”

Fake Hotel Booking Scams Stir Up Turmoil for Travelers

Smartphones have made the problem worse because small screens can “mask phony sites, making it more difficult to identify details that aren’t quite right, like a phony URL or toll-free number that look like the hotel’s direct reservation desk, but are really from a third party,” Power wrote.

Wind up booking with a disreputable site, and you may not get the reservation you paid for. And because the hotel didn’t get the money, they can’t refund it to you. Worse yet, you could be giving your personal information to an identity thief.

“Book with the wrong website and it could ruin your vacation or business trip and be mighty costly,” said Steve Danishek, a Seattle-based travel expert. “In the worst case scenario, you can show up at the hotel and they don't have a reservation or even a room left for you. Then what do you do?"

Other potential problems when booking with the wrong site:

  • Charges for undisclosed fees
  • Paying a higher rate than advertised by the hotel
  • Inability to change or modify reservation
  • Reservations that don’t reflect special requests
  • No points with the hotel’s rewards program
It’s unpleasant for everyone

Imagine showing up at a hotel, confirmation email in hand, and the person at the front desk says you don’t have a reservation. Or maybe you booked a room with double beds to sleep four and the reservation the hotel received from that phony site was for a single bed.

“It’s a real challenge,” said Andy Vasani, president and CEO of InnVite Hospitality which owns and operates eight hotels in Ohio. “If there’s inventory available we would tell them that it’s a higher rate and we expect them to pay the difference. Sometimes they are not willing to pay the difference and we just eat that loss.”

And if the hotel is sold out, staff will refund the deposit only if it was received it, Vasani told NBC News. If the traveler booked with a con artist who kept the money, all they can do is dispute the charge later with the credit card company. That creates some tense situations at the front desk.

“We’re in front of them, so obviously they blame us, even though we had nothing to do with it,” Vasani said.

Could more be done?

The Federal Trade Commission (FTC) published a warning on its website this summer (Did you book that night at the hotel’s website?) about the problem. A number of people commented on the FTC website, including a poster who identified herself as Felicia Johnson:

“This happened to me. I thought I was making reservations directly with the hotel but it was not affiliated with the hotel. I was charged a higher rate than I should have been charged. I tried to cancel my reservation that I made with the bogus company but was told that I still would be charged the total price as a penalty.”

But the hospitality industry would like to see federal regulators do more to go after the bad actors.

“The government really hasn’t cracked down on this,” the hotel association’s Cope said. “There are plenty of rules on the books about deceptive marketing, but if nobody cracks down and the bad guys can get away with it, they will keep doing it.”

Florida is the number one travel destination in the country, so booking scams are a serious concern for the lodging industry there. This summer, the Florida congressional delegation wrote FTC Chairwoman Edith Ramirez, urging the commission to “immediately open an investigation into the companies deceptively targeting consumers with fake online hotel websites.”

“We are cautiously optimistic the FTC will do their job, but we’re going to look to see if there are legislative remedies as well,” Rep. Lois Frankel, D-Florida, told NBC News.

Protect yourself

The best way to avoid surprises is to call the hotel directly or visit its website, or book through a reputable, well-known travel website, such as Expedia, Hotels.com or Priceline.

Remember, fake sites use URLs that are similar to the real ones. Slow down and make sure you typed in the correct address.

A random search, such as “hotels in Cleveland” or “Hiltons in Chicago,” can give you questionable results.

Does a price seem just too good to be true? Consider that a warning sign.

Always use a credit card to book your reservation. Credit cards provide much better fraud protection than debit cards.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.