Bundled fees, a hornet's nest

Question: I recently booked a stay at the Westin Resort & Spa in Whistler, British Columbia, through Orbitz and was charged 20% in taxes and fees. After the trip, I wrote to Orbitz for a refund of the 7% Canadian government tax. Orbitz told me it had already been "applied."

I was confused. Did I pay the tax or not? Am I due a refund, or did they keep it? Orbitz wouldn't explain the taxes and fees. Shouldn't travel websites be required to disclose these bundled charges?

Bruce Markoe

Culver City

Answer: Bundled charges are a hot topic.

Third-party websites routinely combine taxes and fees to avoid disclosing the pricing — and profits — behind their discount rates. Consumers should take these charges into account because they can add as much as 30% to the bill. Bundling also makes it harder to tell how much of that money goes to taxes or to the site's service fee.

Federal law does not require online travel providers to itemize these charges on a bill.

But some local ordinances require it. In Los Angeles, for example, "it's a misrepresentation to not break out taxes and fees," said travel attorney Al Anolik, author of "Traveler's Rights."

Los Angeles filed a class action this year against 18 online companies doing business with hotels in the city, which could test the legality of this practice.

But if rates are revealed, the deals will go away, said Arthur Sackler of Interactive Travel Services Assn., a trade group. Consumers, he said, care only about the total price.

Opaque pricing may work for third parties such as Priceline, where the rules are clearly spelled out, and consumers are more willing to trade price disclosure for cheap rates. But most online middlemen are not Priceline. They embed fees into their prices and do a "collectively poor job at explaining these policies to consumers," said Henry Harteveldt, a travel analyst with Forrester Research.

In Markoe's case, the numbers didn't add up. Of the extra 20% (or $471.44) charged to his reservation, 17% (including a 10% nonrefundable occupancy tax) should have gone to taxes. The remaining 3%, he assumed, was the website's fee.

Orbitz denied his request for a refund of the 7% Canadian goods and service tax and wouldn't tell him whether his rate was reduced by that amount or whether it kept the money.

His final bill didn't offer any clues, and Orbitz declined to answer.

Orbitz told us that our reader could apply for a refund. We also called competitors Expedia and Travelocity. All three were reluctant to discuss tax issues because of the pending litigation.

"You're currently scratching the surface of a huge iceberg that has implications across the country," said Paul Kiesel, an attorney for the plaintiffs in the lawsuit.

Pressed further, one of the third-party providers said consumers forfeit their refunds when they book Canadian hotels through these sites. That's because only hotels, not websites, can officially collect taxes. Consumers pay the equivalent of the 7% goods and service tax as part of their reservations. Websites pass those funds on to hotels.

Online bookers can't apply for a refund because the websites are not technically collecting taxes. In the end, Markoe lost a 7% refund for not booking directly with the hotel.

Both Expedia and Travelocity allude to this "tax recovery" policy in their user agreements, but they're difficult to understand. Only Expedia includes a disclaimer on the reservations screens, stating that the Canadian tax is not refundable.