BBB Urges DOT To Retain Airfare Advertising Rules

4/20/2006

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[Arlington, Va., April 18, 2006] – The Council of Better Business Bureaus is urging the U.S. Department of Transportation to retain current airline advertising rules.

“These rules have worked well for 20 years, protecting the public from deceptive advertising and assuring competitors a level playing field that promotes vigorous price competition,” wrote Steven J. Cole, president and CEO of the Council of Better Business Bureaus (CBBB) in a letter to the DOT commenting on its proposed regulatory changes to the airfare advertising rules.

Under the DOT rules currently in effect, airline advertising that lists a price must state “the entire price to be paid by the customer.” DOT does exercise discretion in allowing carriers to separately list taxes and certain government fees in the advertisement without bundling them in the advertised airfare.

DOT announced last December that it was considering changing the rules and requested comments on several possible “options” for a future rule. The four options included proposals to weaken or eliminate these regulations that were imposed in 1984 to address deceptive advertising practices by the airlines industry. For example, one proposed option would permit airlines to advertise fares without including in the fare, and without disclosing anywhere else in the advertisement, any airline-imposed surcharges or government-imposed charges.

The CBBB considers such proposals to be “radical and inconsistent with accepted norms regarding truthful and accurate advertising.”

The CBBB’s letter expressed full support for one of the proposed options that would maintain the status quo by leaving the rule as written, and maintain the discretionary enforcement policy.

The Council of Better Business Bureaus (CBBB) is the umbrella organization for 116 Better Business Bureaus (BBB) across the U.S. Through the national memberships of more than 250 leading edge companies and the network of member BBBs, the Council promotes the highest ethical relationship between businesses and the public through voluntary self-regulation, consumer and business education, and service excellence.

“Keeping the rule as is would best serve the interests of consumers…without unduly burdening the advertisers or hampering (DOT) enforcement efforts,” the CBBB said.

The BBB organization pointed out that the airline industry has not faced any technological or logistical problems in creating ads that comply with the current regulations. In addition, the current rule has “helped to create a climate of easy comparison shopping.”

Mr. Cole’s comments were submitted on behalf of the CBBB, which has a national member base of 250 U.S.-based corporations and serves as the umbrella organization for the 130 local Better Business Bureaus (BBBs) throughout North America.

Protecting consumers from deceptive and unfair advertising and businesses from unfair competition resulting from such advertising practices has been at the heart of the BBB mission since its founding in 1912.

That is one reason why the CBBB opposes the elimination of most or all of the advertised fare rules (as proposed in two of the options), noting that such actions “would encourage deceptive advertising and inhibit effective price competition.”

Of particular concern would be the elimination of regulations requiring an advertised price to be the actual price to be charged.

BBB experience in the area of truthful advertising suggests that such changes “would open wide the door to the use of ‘come on’ ads that state a fare lower than the real full fare or price.”

Airlines advertisements that do not disclose the actual price of the airfare, Cole said, “cannot have any purpose other than trying to achieve an unfair advantage over more honest competitors and to entice consumers to select the advertiser based on a fake understated fare.”

The advertising industry has long recognized that an ad that omits or obscures a material fact is a misrepresentation, as stipulated in the BBB Code of Advertising.

The CBBB president questioned what reason there could be for not stating the full price or fare at the outset, “other than to mislead to the detriment of both consumers and competitors.”

He further noted that nothing relevant to this truth-in-advertising issue has changed since the adoption of the rule in 1984 that would warrant modifying the regulations.

“It is clear that whether the ad appears in print, on the Internet or is broadcast, an ad that portrays anything less than the full fare imposed by the airline as the fare, and fails to disclose other government-imposed charges, is deceptive and unfair to consumers and competitors alike.”

The CBBB also opposed an option that would retain the present rule, but eliminate the various exceptions, thereby requiring the bundling of all charges into the advertise price.

“This option would require no more than what many airlines now do in setting out fares on their Web sites. …it would not appear to offer consumers and fair competition any more protection that what is encompassed by the current rule and might entail greater complexity in the formulation of airfare ads,” Cole wrote.

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