Hopper has agreed to settle a lawsuit with the US Federal Trade Commission over allegedly charging customers hidden fees on its travel booking app.
The news: The Montréal travel tech startup has settled a complaint from the US federal regulator for $35 million USD ($49.7 million CAD), which claimed it charged consumers hidden fees and misrepresented the total prices they would pay for its booking services. The complaint, filed on July 2, alleged that Hopper caused consumers “tens of millions of dollars in harm.” The company and its US subsidiary must clearly and conspicuously disclose fees, charges, and total payment amount for any transaction.
In a statement on Thursday, Hopper said the FTC’s allegations concerned former practices that it had implemented during the COVID-19 pandemic and discontinued in mid-2023. It added the FTC had no issues with the current Hopper app.
From the source: “We decided to settle because the claims at issue are outdated and have no bearing on our business,” reads an official statement from Hopper. “Pursuing years of litigation over outdated, ticky-tacky issues would distract us from our current customers and partners— and that is not a distraction we are willing to accept.”
Following the thread: Founded in 2007, Hopper made its name with an algorithm that predicted the best times to book flights. During and after the COVID-19 pandemic, it has since shifted its approach to sell its travel technology and data to enterprise customers through its B2B arm, which now drives more than 90 percent of revenue. The legal case focuses on deals with design decisions Hopper made for its consumer app specifically; Hopper noted that its B2B business is separate and not impacted by the settlement.
Final thought: The FTC has been cracking down on “dark patterns” in consumer-facing apps and websites since 2021. These are deceptive design features that might lead a user to take an action they didn’t mean to, or make it more difficult to cancel a subscription.
In Hopper’s case, the FTC took issue with the way the company charged for tips and VIP support fees—by claiming they were optional when they were actually pre-selected for customers. In Canada, dark patterns are often governed under the Competition Act as a deceptive marketing practice. BetaKit has reached out to the Competition Bureau to ask if it had also investigated Hopper regarding this practice.
Feature image courtesy John McArthur via Unsplash.