Investigation of FlightHub ends with $5.8M in total penalties for company and directors

From: Competition Bureau Canada

February 24, 2021 – GATINEAU, QC – Competition Bureau

In addition to a $5 million penalty for FlightHub Group Inc., two company directors have agreed to penalties of $400,000 each after the Competition Bureau concluded that the online travel agency charged customers hidden fees, authored positive customer reviews to promote its services, and made numerous false or misleading claims about its prices and other flight-booking services.

The penalties are part of a settlement registered today with the Competition Tribunal, which prohibits FlightHub and directors Matthew Keezer and Nicholas Hart from making any further false or misleading claims. These include claims about the price of flights, as well as the cost and terms associated with cancellations, rebooking and seat selection. FlightHub is also required to remove any online reviews of its services that were posted by or on behalf of the company but appeared to be from genuine customers.

As part of its investigation of FlightHub’s marketing practices, the Bureau reviewed thousands of consumer complaints, seized documents at the company’s Montreal headquarters, and obtained a Temporary Consent Agreement to protect the public while the investigation was ongoing.

The Bureau concluded that FlightHub made millions in revenue from charging hidden fees, and misled consumers on FlightHub.com and JustFly.com about the costs and terms associated with a range of services, including:

  • Seat selection terms and fees
    • FlightHub actively concealed fees that it charged consumers for seat selection.
    • FlightHub gave the impression that consumers could reserve their seats by selecting specific seats on a seat map, but FlightHub did not secure the selected seats for many consumers.
  • The price of flights
    • FlightHub promoted false or misleading pricing information on the websites and in emails, and at times increased prices after consumers selected a flight.
  • Flight cancellation and rebooking terms and fees
    • FlightHub gave the impression that consumers could obtain cancellation and rebooking rights at no cost, when in fact consumers were charged additional fees.
    • FlightHub gave the impression that consumers had more extensive cancellation and rebooking rights than was actually the case.
  • Obtaining and using “travel credits” for future flights
    • FlightHub gave the impression that consumers could cancel a flight in return for credit on any future flight, when in fact the “travel credit” could be subject to important restrictions and additional costs.
    • In some cases, after a consumer agreed to cancel a flight in return for a travel credit of a specific value, the value later decreased.

In reaching today’s settlement, the Bureau took into account that FlightHub is insolvent and was granted creditor protection by the Quebec Superior Court in May 2020. The associated penalties will be treated as unsecured claims in any plan of arrangement to be filed by FlightHub under the Companies’ Creditors Arrangement Act (CCAA). All other terms of the settlement are binding on FlightHub and the two directors for a period of 10 years, regardless of the outcome of the CCAA proceedings.

The settlement (consent agreement) will be available shortly on the Competition Tribunal‘s website.

Quotes

“We have pursued this case relentlessly to ensure that Canadians would be protected against any further deceptive marketing by FlightHub and its directors. Cracking down on deceptive marketing in the online marketplace is one of the Bureau’s top priorities, and we’ll continue to do everything in our power to stop it.”

Matthew Boswell,

Commissioner of Competition

Quick facts

  • The deceptive marketing provisions of the Competition Act forbid businesses from making false or misleading claims about their products or services.

  • The Bureau began a formal investigation of FlightHub Group Inc.’s marketing practices in November 2018.

  • In February 2019, the Bureau executed search warrants and seized documents at the company’s headquarters in Montreal.

  • In October 2019, the Bureau entered into a Temporary Consent Agreement with FlightHub to prohibit it from using false or misleading marketing on FlightHub.com and JustFly.com while the investigation continued. This was the first temporary agreement of this kind ever obtained by the Bureau during an ongoing investigation.

  • Today’s settlement, which resolves all of the Bureau’s concerns, is designed to ensure that all prices, fees and terms associated with FlightHub’s services are clearly disclosed to consumers.

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