The Netherlands Consumer Authority fines Hotel Group International for selling method

The Netherlands Consumer Authority (CA) has imposed a fine of EUR 105,000 on Hotel Group International (HGI) and on its owner for the way it sold its HotelGroup Passport product. Consumers were contacted by phone and were told they had won a prize or had been offered a free trip. However, it turned out they had actually taken out a subscription to a hotel discount card, called the HotelGroup Passport. Canceling the subscription proved to be very difficult. The sale of products such as the HotelGroup Passport is subject to the so-called timeshare rules, which had not been observed. Bernadette van Buchem, director of the CA, reacts: 'This selling method has harmed consumer faith in businesses. Hotel Group International has not taken the rules governing selling methods and consumer protection seriously enough.' In addition to the fine, the CA has also imposed two orders subject to periodic penalty payments in order to prevent repeat violations.

Background of the decision

Through its consumer information portal ConsuWijzer, the CA received complaints from consumers about phone calls in which they were told they had won a prize or a trip. It was not made clear to them that they were actually taking out a subscription to the hotel discount card HotelGroup Passport. The HotelGroup Passport is a subscription for 12 or 24 months, which, if not cancelled, was automatically changed into an indefinite contract. Annual costs of this subscription were EUR 153.95. The card offered consumers the opportunity to book nights at participating hotels at reduced rates. Consumers wishing to cancel their subscriptions were unable to do so, after which they had to deal with persistent debt collectors. In part because of these reports, the CA launched an investigation.

The CA has established that HGI failed to clearly state the commercial objective of the phone call at the start of the conversation. HGI has misled consumers by telling them they had won a prize or a free trip. The CA has additionally established that the HotelGroup Passport is a so-called ‘long-term holiday product.’ This means that the sale thereof is regulated by the revised timeshare rules. One such rule is that consumers must receive the product information on a permanent data carrier before the signing the contract. In addition, the contract must be signed in writing by both parties. Both of these requirements have not been met, which renders the contracts void. 

Since these activities have severely harmed consumer faith in businesses, the CA has imposed on the organization and its owner a fine of EUR 105,000 for violation of the telemarketing and timeshare rules. The fine must be paid by either the organization or by its owner. The CA has also imposed two orders subject to periodic penalty payments in order to prevent repeat violations.

The organization and its owner have filed objections against the fining decision.