The Checkout

Riled Up Over Resort Fees

My husband, Gary, has a long list of pet peeves. (Don't we all?) Here are just a few of them:

* Bad cell-phone reception.

* The difficulties of making travel reservations online. The hotel/airline/car rental company's computers invariably crash just after entering all the necessary information but before the reservation is final.

* The promotional phrase "free gift." What's a gift if it's not free?

* Commercials before movies.

* Meaningless computerized phone messages, like "Your call is very important to us." Here's his comment on that: "How do they know why I'm calling? It might not be important to them at all. And if it were so important they'd staff the phones adequately so my "important" call got handled in an important manner.

* And invariably on vacation, what really gets him mumbling and grumbling are the "resort fees" many hotels add onto the bill to cover the cost of pool towels, newspapers and other "essentials" that used to be included as part of the overall bill.

So, Gary was pleased when he recently received a notice saying he was part of a proposed class-action settlement with Starwood Hotels because he may have been charged a resort fee without adequate notice. The fee varied from hotel to hotel, but ranged from $3 to $18, the settlement said.

"It's about time," Gary said when he read the notice.

Then he read the fine print. He stands to get two certificates, each worth $14 off his next stay at one of the participating Starwood resorts. Of course, these resorts are not cheap, so he figures he'd have to spend several hundred dollars to take advantage of his $28 settlement. His thoughts on the settlement are unprintable.

The Federal Trade Commission and Trial Lawyers for Public Justice, a nonprofit public-interest firm, have long complained about coupon settlements, questioning their real worth to consumers. So I asked TLPJ staff attorney Michael Quirk about the settlement. Since he didn't know about all the specifics, he only talked about coupon settlements in general: Usually, he said, they only serve consumers when they offer dollars off existing accounts. And the less restrictive, the better. However, he added, coupon settlements are not as advantageous if consumers are first required to buy big-ticket items. Then the coupons may become a source of profits for the company for alleged wrongdoing, Quirk said.

New York attorney Peter D. Morgenstern, the lead attorney representing the Starwood plaintiffs, referred all questions to the legal papers filed in the lawsuit. The plaintiffs allege that Starwood engaged in unfair and deceptive business practices by failing to provide adequate notice of the resort fees. Starwood denies the allegations but said it agreed to settle to avoid protracted litigation. The legal documents note that each class member stands to get two certificates, with a face vaue of either $8 or $14, depending on where they stayed. That amounts to at least 63 percent of the typical amount of resort fees paid per stay, the legal papers say. "This is more than adequate compensation under the law of California [where the case was filed] and other jurisdictions." The documents say 2.28 million consumers are potential beneficiaries, with certificates having a total face value of more than $40.4 million. Of course, it's uncertain how many of those certificates will be cashed in.

How much do the plaintiff attorneys get? No more than $545,000 in fees and costs. "The proposed settlement does not provide for excessive attorneys' fees," the legal papers say.

California Superior Court Judge Jonathon H. Cannon has scheduled a hearing on the settlement for June 8.

By  |  April 24, 2006; 7:50 AM ET Legal Battles/Settlements
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Over the past five years I have been a participant in more than 10 class action suits and continue to shake my head in disgust at the rather pathetic settlement benefits being offered.

I was part of both the Netflix and Starwood actions and most recently received information on a suit against Verizon Wireless for a mobile phone (Motorola V710) that did not deliver the promised Bluetooth functionality. At first, I thought that I would be getting a check for $200, but now that I read the information more closely I find that I am going to get the difference between $200 and the cost of a new phone (that I do not need) from a 'special' Verizon website where everything is priced at RETAIL.

I probably spent an hour trying to sort this out and determined that I MIGHT get $25-30 back, but my time is easily worth twice that which means that I am still coming out behind.

For what it's worth, the only class action suit that provided me any real benefit was for Phen-Fen, but of course, the product could have killed me and any meaningful settlement would have been provided to my wife and kids since I would probably be close to death. I did get some expensive medical tests for free to determine that I did not have any permanent heart damage, but the mental anguish over that 18 months was pretty stressful.

Posted by: Lester Burnham | April 24, 2006 8:41 AM

Resort fees, recovery fees, concession fees..... if there is one thing I hate, it's service providers (hotels, rental car agencies, airlines) adding in fees for services that are part of the basic service, the costs for which are (or used to be) assumed to be rolled into the rate. If you need to add $15 to a plane ticket because gas went up, then make your fare $15 more expensive, don't add it on later as a 'fuel surcharge'!

Likewise, last week I was in Orlando (on business, so I wasn't using the pool, tennis courts, etc.), and stayed at Downtown Disney's Buena Vista Palace. They charged me a $12/day resort fee, on top of a $200/night rate, in a similar fashion. This was NOT disclosed anywhere on their website during the reservation process. This is an absolute crime, I wish that all 'add-on' fees were made illegal.

Posted by: JD | April 24, 2006 8:58 AM

I agree-- resort fees are a SCAM and should not be allowed!

Posted by: Frederick | April 24, 2006 9:46 AM

Actually the Starwod Resort fees might not be such a bad idea in all cases, in fact fees in many cases can be used to encourage more benign behavior such as conservation. We stayed at the Westin St John USVI and they only charged the resort fee to your room if you checked out towels by the pool. Like most people, we went exploring the island many beaches most days and weren't charged the fee: plus the fee helps reduce some of the excessive number of pool towels that might otherwise by used unnecessarily or needlessly; laundry operations at resorts can really get out of hand. If they didn't charge the fee then they would probably raise the room rate to make up the difference anyway.

Posted by: Karen | April 24, 2006 10:11 AM

Although I despise add-on fees, I'm a little surprised to find myself disagreeing with the position that these fees should be "included" with your use of the facility or service. These fees would be perfectly fine as optional fees IF THEY WERE OPT-IN. But the slimy part of this practice is burying the fact that you have to ask at check-in NOT to receive a paper to NOT be charged $2/day, or whatever their exorbitant fee happens to be. If they wanted to charge that and TELL me from the start, I'd be very happy to politely tell them to keep their overpriced paper.

And class action lawsuits that REQUIRE a purchase to be used are just plain extortion. They're worse than useless, because to enjoy any benefit, I have to continue to do business with the same company that screwed over their customers in a systematic enough fashion to lose or settle a class action lawsuit.

Posted by: The Cosmic Avenger | April 24, 2006 10:13 AM

Bad behavior by a corporation is being rewarded by forcing the victims to spend more money with the perpetrator. In the days of the AT&T phone monopoly (which may be returning, but that's another issue), a rebate coupon might have made more sense since you had to keep doing business with them. These days, the rebate coupon settlement is really anti-capitalist.

I think rebate coupons should allow for discounts from all competitors, paid for by the perpetrator. This takes the settlement money from the "bad" company and gives it their competitors at the same time victims are considering alternate relationships. This would make the settlement both painful and a deterrent.

Posted by: Gary Goldberg | April 24, 2006 10:34 AM

Coupon settlements are a disgrace to the legal profession--and I say this a lawyer. Coupon settlements allow the tortfeasor (the party sued) to cut a deal with the lead plaintiff's counsel: short change the class and we'll support a generous fee. This shows the inherent conflict of interests between the class members and their attorneys in coupon settlements. When the attorneys get the cash and their clients--the class--gets worthless scip, the attorneys have a strong economic motive to go along with the defendants and push these worthless settlements.

This is very different from the phony "tort reform" and "abusive lawsuit" movements funded by business and insurers. There is no "lawsuit crisis" but there sure is a coupon settlement crisis. Judges need to carefully scrutinize these settlements to ensure the attorneys put the interests of the class--their clients--ahead of their fees.

On a slightly different note, I once stayed at a Long Beach hotel--the Hilton, as I recall--for an IRS CLE program about 10 years ago. They charged me a special resorts fee for using the workout room they claimed was a gym. The charge was not included in the listed gov't rate, and was not imposed on other guests. The hotel told me they had to charge the fee because--get this--"the gov't rate is too low." I complained to whichever agency managed the gov't rate program (I forget if it was GSA or OPM). They said this was a clear violation of their contract. Of course, I never heard from them again. If they'll shaft the IRS, they'll shaft anyone.

Posted by: Nick | April 24, 2006 1:24 PM

Ok, enough already. Is it so difficult for large corporations out there in the big bad world that they have to resort to chicanery of this sort? And what kind of half-a**ed lawyers (for the plantiffs) agree to this sort of balderdash? Who wouldn't rather have the cash? What good is it to get a "certificate" worth $14 at a place that was scamming you to start with? What if I never want to go back to this provider? What compensation do I get then?

It's just like the current "rebate" scam where you have to file, in triplicate, with numerous small pieces of paper and wait eight weeks to find out that they've "lost" your rebate form! Sweet Georgia Brown, just go ahead and charge me the extra $50 if you're that desparate, or, and this is some pretty radical stuff here, just go ahead and knock $50 off the price!

I feel better letting that out.

Posted by: Bob | April 24, 2006 1:30 PM

$500K is not excessive? Tell me how much the attorneys are being paid per hour to write this entirely useless settlement, then we'll know if it's excessive or not.

Posted by: aj | April 24, 2006 3:39 PM

If only we could insist that the plaintiffs' attorneys had to take their payment in the same coupons they settled for on behalf of their clients, this sort of thing would quickly cease.

Posted by: Anon | April 24, 2006 3:43 PM

I think some of these companies actually ask lawyers to file 'class action suites' against them so that they could 'compensate' their clients with coupons which would force people to spend $$$$ on their services. Quite a creative marketing move.

Posted by: Elle | April 24, 2006 4:14 PM

My pet peeve: Some Marriott hotels abroad charge a daily dollar or two to give to their favorite charity. In Thailand it was for poor children to receive corrective facial surgery. Ask the clerk upon checkout to remove the charge and you feel like a real creep. But it's your money, so why should that be??

Posted by: Gene | April 25, 2006 3:13 PM

I've been saying for years what Anon said, a few posts up. Require the legal fees to be the same IN KIND as what the plaintiffs get.

If the plaintiffs get cash, so do the lawyers. If the plaintiffs get coupons for 20% off their next purchase with the company that was sued, then that's what the lawyers should get too. And if it's a mix of one thing and the other, then the lawyers' fees ought to be composed of the same mix as the plaintiffs' award.

Posted by: RT | April 26, 2006 12:10 PM

Well, if you don't like the coupon settlements (and they are fully intended by the settling parties to be a genuine rip-off for the consumers), then you should complain to the class action settlement judge at the time of the final settlement hearing. Your beef is legitimate and many judges have had it with coupon settlements - especially since the attorneys fees are usually linked to the represented "value" of the coupons. It is easier, however, to address your concerns to your elected representatives.

It has been correctly noted that coupons have minimal loss/payment value to the settling companies, because the coupons will either not be used or, if used, there will be even more profit. Coupons typically have no value to the settling consumer. They have immense value to the plaintiff's lawyers. And, the corporations love coupons, because the settlement buys peace (at little cost) for anything it may have done to any of its customers during the past several years. Do corporations and plaintiff's lawyers arrange for mutually beneficial agreements while disregarding the interests of the class? Of course. It is big business, and those are the rules of the game when the monetary stakes are very big, when anonymity facilitates screwing the unseen person, and where human nature is permitted to run without ethical constraints.

The problem is in the area of ethics, and the solution must come from a kind soul - something that is sadly lacking in much of this country, and especially lacking among corporate management and lawyers.

Posted by: SAU | May 1, 2006 11:40 AM

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