Hotel Booking Scam

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Five members of the Arizona US Congressional Delegation recently sent a letter to the Department of Justice, asking it to investigate an ongoing hotel booking scam that has been causing consumers problems as they work to book their summer vacations. Third-party travel sites are trying to pass themselves off as actual hotels, leaving consumers without particular room requests or sometimes even a reservation. Kristen Jarnagin, senior vice president of the Arizona Lodging and Tourism Association, will tell us more about the scam.

TED SIMONS: Coming up next on "Arizona Horizon"…details on a hotel booking scam just in time for the summer travel season. And the valley community of Rio Verde wins a sustainability award. Also, controversy over plans to restore a Frank Lloyd Wright house in Arcadia. Those stories next on "Arizona Horizon".

Video: "Arizona Horizon" is made possible by contributions from the friends of Eight, members of your Arizona PBS station. Thank you.

TED SIMONS: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. The feud between superintendent of public instruction Diane Douglas and the state board of education reached a new level this weekend as the board moved its staff out of the department of education's building and into the governor's executive tower. The board got clearance to make the move in April but it was unclear as to when or if the change would happen. One board official says the move was made to protect employees from an unhealthy work environment at the education department. The fight between the two agencies began after Superintendent Douglas tried to fire two board employees resulting in Governor Ducey announcing that Douglas lacked the authority for such action. We will have much more on this story tomorrow with Jaime Molera, who has served as both superintendent and as a member of the board.

Five members of Arizona's U.S. congressional delegation recently sent a letter to the justice department asking for an investigation into an ongoing hotel booking scam. Here to tell us about the scam is Kristen Jarnagin; she is senior vice-president of the Arizona Lodging and Tourism Association. It's good to see you, thanks for joining us.

KRISTEN JARNAGIN: Thank you for having me.

TED SIMONS: Alright, we've got a hotel booking scam to talk about. What's going on here?

KRISTEN JARNAGIN: Well we want to raise awareness to consumers because the majority of people have no idea that this is going on, even our hotels are really confused and had to do a lot of research to find out how this scam was taking place, and most people don't realize that you've been scammed until you show up at your hotel. So basically, what's happening is there's these online travel companies where you go online and you book a room, not the major ones that you and I have heard of, Priceline, Travelocity, etc, these are ones that you've never heard of…random names -- Booking Counter or How-to-Book or there's things you've never heard of. But the problem is that they're pretending to be the hotel. So their website looks as though you're calling the hotel directly or you're booking online with the hotel when in fact, you're booking with a company you've never heard of.

TED SIMONS: So they basically copy the hotel's website as best they can, use logos, signage, the whole nine yards?

KRISTEN JARNAGIN: It's very, very difficult to tell if you're booking with a hotel or with this company that you've never heard of. But there are signs when you're looking at the URL address; you can tell because there's usually a slash or something else in the URL address, but you do have to pay attention which is why we're trying to alert consumers.

TED SIMONS: So you'd think, though, that folks that book online, you'd think they'd be somewhat savvy, that they would be aware of it. But it's still going on, isn't it?

KRISTEN JARNAGIN: It is very difficult because if you look at the hotel, it's got the logo, it's got images of the property and sometimes, even if you are savvy…I was talking to someone in the green room and they said, "Oh, I always just call the hotel." These companies are pretending to be reservation desks with the hotel so when you call, they answer as though they're the hotel. So it's very difficult. You have to be very careful.

TED SIMONS: So I'm pretending to be this resort hotel on the beach or something like that, I've got the website, I've got a phone number on the website, I'm sitting there by the phone, you call and I'm saying "Oh, sure, send the money here."

KRISTEN JARNAGIN: These are call centers basically; there are call centers all over the country and they've got little pieces of inventory of hotels nationwide. So there are some ways to make sure you're booking directly with the hotel if you do call. Ask some simple questions about the property itself. Ask about the restaurants, what's in walking distance, ask about the destination, and if the person on the other end of the line doesn't know any of the answers, you're probably not talking directly to the hotel.

TED SIMONS: Interesting. So, so far, I mean, how many reservations were affected, how many hotels and customers affected?

KRISTEN JARNAGIN: It's very difficult to know because it's a fairly new problem that we've discovered, but it's a billion dollar business, booking online. We all love to do it, you love to get online, it's convenient to find the lowest rate and book it easily. And the problem is you don't realize until you get there. Often times, let's say you want to cancel, something happens, travel plans change consistently and when you book directly with the hotel you can usually have a 24-hour window. If you get there, something's not right, they'll give you your money back. But what happens is, if you get there and something's wrong and you've already prepaid with this other company, then by the time you try to reach out to them for a recourse, they've closed down and reopened under another name.

TED SIMONS: I was going to say, how long can you stay in business as a phony hotel booking agency?

KRISTEN JARNAGIN: Well, it was happening for a while, and the hotel industry has caught on. So what happens is, we realized -- as soon as the hotels realize that this is happening, they'll do a cease and desist order against that company, but then all they end up doing is shutting down and opening up under another name. So it really is very deceptive for the consumers, which is why it's so great that our elected officials have taken a stand in Arizona and stepped forward with this letter.

TED SIMONS: I would imagine there's a backlash now against online booking agencies. There's probably a backlash against some hotels, because as you mentioned, you show up suitcase in hand ready to go and they're saying, "Who are you?"

KRISTEN JARNAGIN: Right. Most oftentimes you're probably going to have a room. The problem is it's not necessarily the room that you were promised on the phone. So if you have any special requirements, if you wanted a room with a view, if you wanted something with a connecting room as many families do… non-smoking, if you have pets, if you have handicap accessible, those are the little things that you show up and you're unhappy with your stay, and then it reflects on the hotel which had nothing to do with the booking. And that's the real problem for the hotels - we want you to have a great stay and not have any surprises when you check in.

TED SIMONS: Well what kind of recourse does a traveler have?

KRISTEN JARNAGIN: Very little. That's why we're trying to say pay attention when you book, take that extra moment to make sure you are booking with who you think, because if nothing else your personal financial information is being given to who knows. So you want to make sure that you protect your financial information, as well.

TED SIMONS: Is the hotel industry doing something about this?

KRISTEN JARNAGIN: Absolutely. So since we've learned about it, we've been doing the cease and desist orders. We're trying to get the Federal Trade Commission to open an investigation, and as you said, the letter to the Department of Justice has been really instrumental in raising awareness of this issue in Washington, D.C. and trying to initiate some action.

TED SIMONS: Are these bogus hotel bookings, are they surging of late? Are they increasing? It sounds like -- what's going on out there?

KRISTEN JARNAGIN: Well it's a multibillion dollar business, and they get pieces of inventory that are siphoned off from other companies and they can easily put up a website and sell the property. So it's a great business and it's a lot of revenue for them, as long as the customer arrives and has a great stay. Everybody's happy when you book hotels; we're not saying you have to book directly through the hotel - there are plenty of reputable services. We just want the consumer to be protected.

TED SIMONS: I don't even know if travel agencies exist anymore, but those that still do, are they finding problems along these lines as well?

KRISTEN JARNAGIN: Well if you book through a travel agent, the travel agents are very savvy, and they're going to know, they're going to call direct and they have a special line for travel agencies. But even for a lot of our savvy travelers, if you have loyalty points for your favorite brands, oftentimes if you book through this other company they'll tell you you're going to get your points. When you arrive, you realize you actually don't get any credit or points for your stay. So it really is important that you try to book through the hotel so that you're protected once you arrive and you get the experience you were hoping for.

TED SIMONS: Impact on Arizona tourism, what are we seeing out there?

KRISTEN JARNAGIN: Well the reason our congressional delegation in Arizona has really taken a stand for this issue nationwide, which is so great, is because they really understand the value of tourism to Arizona. Arizona is number one and two, depending on the day, of industries - it's tourism and high tech. We employ almost 200,000 people in the state, and it's a $19.9 billion industry. $2.9 billion of that goes straight to our tax revenues, which, whether or not you like visitors or you get to stay at the hotel, it keeps every single household's taxes down by over $1,000 a year. So it's something we really need to protect to continue to get the visitors coming here.

TED SIMONS: And it's something we didn't know about and that's why we had you on. Kristen Jarnagin, thank you so much for joining us. We appreciate it.

KRISTEN JARNAGIN: Thank you so much.

Kristen Jarnagin:Senior vice president of the Arizona Lodging and Tourism Association

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