Understanding Linked Travel Arrangements under the EU Package Travel Directive, Lecture notes of Communication

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Industry Guidance EU Package Travel Directive June 2018 SETTSA Contents Section Pages Introduction: Helping operators to prepare for the Package Travel Directive 2 Making Linked Travel Arrangements Workable for Operators and Meaningful for Consumers 3 Linked Travel Arrangements: Understanding “facilitation” through the e-Commerce Directive 4 Linked Travel Arrangements: Understanding “in a targeted manner” through the Unfair Commercial Practices Directive 5 Linked Travel Arrangements: Two Legal Tests 6 Linked Travel Arrangements: Applying the Legal Tests 7 Linked Travel Arrangements: “A Single Visit” or Contact With his “Point of Sale” 8 Linked Travel Arrangements: “In a Targeted Manner” 9 Linked Travel Arrangements: Examples 10 - 21 Linked Travel Arrangements: Insolvency Protection and The Standard Information Form 23-26 Exclusion of Accommodation for Residential Purposes 27 Assessing Packages Including “Other Travel Services” 28 1 Linked Travel Arrangements: Understanding “facilitation” through the e-Commerce Directive The Commission’s ‘Guidance on the implementation/ application of Directive 2005/29/EC on Unfair Commercial Practices’ (published 25th of May 2016) analyses the interaction between the e-Commerce Directive and consumer law. It refers to the L'Oréal vs eBay case (C-324/09) in order to understand the circumstances under which a platform can be considered to be active and therefore outside of the safe harbour protections in the e-Commerce Directive. Paragraphs 115 and 116 of the judgement set out the Court’s reasoning in this case: 115 As the United Kingdom Government has rightly observed, the mere fact that the operator of an online marketplace stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers cannot have the effect of denying it the exemptions from liability provided for by Directive 2000/31 (see, by analogy, Google France and Google[C-236/08], paragraph 116). 116 Where, by contrast, the operator has provided assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting those offers, it must be considered not to have taken a neutral position between the customer-seller concerned and potential buyers but to have played an active role of such a kind as to give it knowledge of, or control over, the data relating to those offers for sale. It cannot then rely, in the case of those data, on the exemption from liability referred to in Article 14(1) of Directive 2000/31. In this case eBay was considered to be “active”, and therefore lost its intermediary liability protection, when it optimised the presentation of offers for sale or promoted them thereby giving it “knowledge”. “Facilitation” in the context of the revised Package Travel Directive must be considered as “active” in the sense described in the L'Oréal vs eBay case. Situations in which a trader is acting in a neutral way with no effort to optimise or promote an offer for sale would therefore not contribute to the creation of an LTA. 4 Linked Travel Arrangements: Understanding “in a targeted manner” through the Unfair Commercial Practices Directive (UCPD) In an attempt to explain the interpretation of “in a targeted manner” the Directive in recital 12 excludes “advertisements on websites” placed by “cookies or meta data” and in recital 13, as an example of an LTA in a “targeted manner”, makes reference to an “invitation to book” provided with a confirmation of the booking of the first travel service. While there is no definition of the term “invitation to book” provided in the PTD, the Directive 2005/29/EC on Unfair Commercial Practices (UCPD) does make a similar distinction between advertising and an “invitation to purchase”. Article 2, (i) of the UCPD defines an ‘”invitation to purchase” as “a commercial communication which indicates the characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make an informed purchase”. This is a useful frame of reference by which to understand “in a targeted manner”. Following the logic of existing European legislation, a targeted manner would entail conveying both the price of a second travel service and its characteristics. Advertising through which consumers are “simply informed” but does not include either price or details of the characteristics of the service could not be considered to be “in a targeted manner”. 5 Linked Travel Arrangements: Two Legal Tests Any operator seeking to assess whether a Linked Travel Arrangement could be formed first has to assess whether the two “travel services” involved meet certain baseline conditions: • They are one of carriage of passengers, accommodation, car rental or an additional tourism services which is not ancillary and constitute either more than 25% of the overall value of the package or is the purpose of the trip or holiday. • They are for the purpose of the same trip or holiday. • They result in separate contracts. • There is an element of “facilitation” i.e. an action on the part of the trader There are then two tests, set out in sub-paragraphs (a) and (b) of Article 3.5, that the operator has to apply. These tests are designed to cover “facilitation” in order to procure a second purchase during a single contact or visit with a single point of sale, sub- paragraph (a), and “facilitation” in a “targeted manner”, sub-paragraph (b). The former has a lower burden of proof because the intention to incentivise a second booking is clearer, if you interpret a single visit or contact with a point of sale to mean the booking path. By contrast “facilitation” in a “targeted manner”, which occurs outside of the booking path involving multiple points of sale, entails several qualifiers. In the following page we set out a decision tree explaining how these legal tests should be applied in practice. 6 Linked Travel Arrangements: “In a Targeted Manner” • It is not the intention of the Directive to include all internet advertising in the scope of Linked Travel Arrangements since the recitals of the Directive make a distinction between advertising that “simply informs” consumers about the availability of relevant travel products vs targeted efforts to procure a second, linked purchase. • Recital 12 of the Directive makes clear that general internet advertising e.g. where cookies or meta data are used to place advertisements cannot be considered as being “targeted” in the sense described in subparagraph (b) of Article 3.5. This advertising, as is the nature of online advertising which uses cookies to anticipate a consumer’s preferences, will always be relevant e.g. will advertise services at a location where the consumer has already booked a flight. However, this type of advertising will not include a bookable offer for sale (through a deep link) for an additional service linked to the first travel service. The recital talks about advertising which is only designed to “simply inform” the consumer but is not a genuine attempt to facilitate a linked transaction “in a targeted manner”. • Recital 13 supports an interpretation of Linked Travel Arrangements as occurring where a consumer is targeted with a tailored offer for sale inducing them to make an additional linked purchase. The recital uses the example of an email sent after the booking of a first travel service with an “invitation to book” suggesting an offer for sale is made. To make an offer the trader would have to be in possession of the travel dates and travel location. It is not enough to simply inform consumers about the existence of relevant travel services, rather they must be invited to book directly through an offer. • This distinction between advertising that “simply informs” and an “invitation to book” through an “offer for sale” is consistent with the approach used in the UCPD (see page 5 of this document). The UCPD distinguishes between an “invitation to purchase” and mere advertising, with the former including characteristics of the product or service and an indication of price which allows consumers to make an “informed purchase”. What the Directive says: Recital 12 Targeted manner does not include general advertising “where cookies or meta data are used to place advertisement on websites” (Recital 12) What the Directive says: Recital 13 A Linked Travel Arrangement occurs where there is an invitation to book i.e. a real bookable offer for sale. “…where along with the confirmation of the booking of a first travel service, such as a flight or a train journey, a traveller receives an invitation to book an additional travel service[…]” In scope Must include an offer which is more than just relevant but in fact is bookable i.e. is based on knowledge of both the travel destination and dates. Out -of-scope Informational but relevant advertising e.g. in the form of a banner or pop- up advertisements. Placed directly on a website using cookies or metadata by another trader or indirectly through an intermediary like Google AdSense. 9 LTA (a): In-Scope Example White labelling (single visit to same point of sale) White labelling implies that upon conclusion of the first booking with a supplier (airline, etc.), the consumer stays in the same visual environment and the first trader “facilitates” the purchase of a second travel service. The supplier of the additional travel service is different from the first supplier (see the light branding for hotels.com in the bottom right of the adjacent screenshot), but the look and feel of the website for the consumer remains the same. 10Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. Post sell while in the booking path of the same trader LTA (a): In-Scope Example 11 After the consumer books a return flight to Los Angeles, the trader (in this case eDreams) “facilitates” a continuation of the booking process by asking the consumer to “Add a car rental to your trip” and offering different options and prices. The second transaction is made through the same branded website but “selected and paid for separately” and “for the purposes of the same trip or holiday”. Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. LTA (a): Out-of-Scope Example Consumer returns to the same point of sale to make a second booking 14Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. A consumer books a flight to Johannesburg through a high street travel agent. They pay for the flight ticket and then leave the shop. Later on, the consumer returns to the shop in order to purchase hotel accommodation for the same trip and they conclude a second transaction. In this case there is no “facilitation”. This is comparable to the consumer using a tab on a website booking confirmation to make a second purchase (see page 12 above). Second visit LTA (b): In-Scope Example 15 Post sell in a “targeted manner” with an “invitation to purchase” through a deep link to purchase When receiving a booking confirmation of the first travel service (via email or equivalent), the consumer is invited to purchase an additional travel service through a link to an actual “offer for sale”. Clicking through the deep link for the first hotel offer at the Park Plaza in Westminster Bridge, the consumer gets a bookable hotel offer Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. Offer is from “another” trader LTA (b): Out-of-Scope Example 16 OTA booking confirmation with hotel booking site advert In this case, the consumer is shown an advert for a hotel booking site with a booking confirmation for a flight to Los Angeles. The site has the purpose of informing them about the availability of another relevant category of travel service. The location referenced in the advert is the same as the search but there is no specific offer being made. The off-line equivalent of this would be the static advertisement in the retail space or shop window of a high-street travel agent. If such an advertisement (e.g. a branded airplane display) would encourage the consumer to book a travel service separately at home, that travel service could never give rise to an LTA in combination with any other travel service booked during his/her visit in the travel agency. Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. LTA (b): Out-of-Scope Example Supplier website Supplier website with other supplier ad 19 The consumer receives an advertisement from the Accor hotel group after booking a Thalys to Paris: “Up to 10% off your hotel”. This has the purpose of informing the consumer about the availability of another relevant category of travel service (so for a specific location but not linked to the specific travel transaction of that specific customer). Should the customer click on the ad he/she will have to complete a new booking path providing name, e-mail address payment details etc. on the website of the other trader which is clearly branded differently to the consumer. Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. LTA (b): In-Scope Example Offline travel agent uses a brochure to “facilitate“ a second purchase (within 24 hours) in “a targeted manner“ 20Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. A consumer books a flight to Johannesburg through a high street travel agent. The travel agent “facilitates” a second transaction by giving the consumer a brochure with the rates per week (thereby giving the consumer an “incentive to purchase” through “a bookable offer for sale”) for hotel options in Johannesburg. There is a discount code linked to the travel agent. The consumer then returns home and makes a booking direct with the hotel using the discount code within 24 hours of the first purchase. LTA (b): Out-of-Scope Example Offline travel agent uses a brochure to “facilitate“ a second purchase (more than 24 hours later) 21Screenshots are for illustrative purposes and do not necessarily reflect actual bookings. However, the scenarios are real. A consumer books a flight to Johannesburg through a high street travel agent. The consumer then returns home and makes a booking direct with the hotel using the discount code more than 24 hours after the first purchase. The travel agent “facilitates” a second transaction by giving the consumer a brochure with the rates per week (thereby giving the consumer an “incentive to purchase” through “a bookable offer for sale”) for hotel options in Johannesburg. There is a discount code linked to the travel agent. Linked Travel Arrangements: The amended Standard Information Form (on the basis of art 19 last paragraph) • Article 19 requires that traders facilitating Linked Travel Arrangements provide the appropriate insolvency protection for the refund of all payments they receive from consumers. • A large proportion of online bookings made through intermediaries involve the receipt of no payments from consumers, instead funds go straight to the airline or are paid on check out at a hotel. However, in cases where an intermediary is the first trader in a Linked Travel Arrangement, the Directive suggests that they will still be required to inform the consumer of the “protection” afforded to them under an LTA before they conclude a contract with a second trader. This is despite the fact that this protection does not exist in reality, as the intermediary only has insolvency protection for the payments it has received from the consumer which in the majority of cases is nothing. • This renders the Standard Information Form confusing for consumers who may be misled into believing that they have enhanced protection when this is not the case. The objective of the Standard Information Form is to ensure that consumers understand the protection afforded to them by the purchasing choices they make. It would be a better outcome for consumers and businesses if it is an accurate reflection of reality. For this reason an amended Standard Information Form could be used on those situations: If, after selecting and paying for one travel service, you book additional travel services for your trip or holiday via our company/XY, you will NOT benefit from rights applying to packages under Directive (EU) 2015/2302. Therefore, our company/XY will not be responsible for the proper performance of the individual travel services. In case of problems please contact the relevant service provider. Please note that there is no refund in the event of the insolvency of the relevant service provider. What the Directive says: Article 19 • Member States shall ensure that traders facilitating linked travel arrangements shall provide security for the refund of all payments they receive from travellers… • Before the traveller is bound by any contract leading to the creation of a linked travel arrangement… the trader facilitating the linked travel arrangements… shall provide the traveller with [information in the] standard form set out at Annex II… • ….or, where the particular type of linked travel arrangement is not covered by any of the forms set out in that Annex, provide the information contained therein. 24 Linked Travel Arrangements: Size of devices and screen space needs to be taken into account The standard information form needs to be adapted to work on small screens like smart phones and tablets Limiting the standard information form to the first half of the message helps to convey the correct message to consumers 25 Linked Travel Arrangements: When to serve the Standard Information Form 26 Search page Selection of travel service Agreement to offer Consumer uses tabs to select a second travel service for the purposes of the same trip or holiday Consumer is encouraged to continue the booking process e.g. “Add a car rental to your booking” and clicks through to either the same website or a white label site with the same look and feel Within a 24 hour period the consumer is served a targeted invitation to purchase by another trader, either on the same website or through a confirmation email or another means First transaction Second transaction No LTA and therefore no Standard Information Form LTA and therefore Standard Information Form should be served LTA and therefore standard information form should be served LT A A : S in gl e vi si t o r co n ta ct w it h o n e p o in t o f sa le LT A B :” In a t ar ge te d m an n er ” Consumer is not bound by any contract leading to the creation of a Linked Travel Arrangement Optimal opportunity for the trader facilitating the second traction to serve the standard information form in a meaningful way Providing Standard Information Form prior to the first transaction is not meaningful for the consumer