DEUTSCHE LUFTHANSA FINED $50,000 FOR VIOLATIONS OF THE FULL FARE ADVERTISING RULE
July 22, 2019
On June 4, 2019, the U.S. Department of Transportation issued a consent order fining Lufthansa $50,000 for violations of the full fare advertising rule for displaying prices that incorrectly included an excise tax on non-revenue tickets, as well as improperly collecting and remitting the tax. Half of the penalty will be forgiven in one-year so long as Lufthansa does not repeat the violation.
The enforcement action by DOT was triggered by a consumer complaint alleging that Lufthansa was engaging in a practice of improperly collecting taxes that were not due on non-revenue international tickets sold through its U.S.-facing website. DOT determined that Lufthansa became aware of these issues in November 2016, but continued to collect the $17.80 tax through 2016 and then increased the tax amount collected to $18.00 in 2017. A correction was not implemented by the airline until November 2017, after over 6,900 consumers had been improperly charged.
In response, Lufthansa stated that it was only made aware of two instances of the tax being inappropriately applied to non-revenue tickets, which Lufthansa believed to be isolated incidents. In both cases, the taxes were refunded, and Lufthansa stated that the improper application of the taxes was due to an inadvertent software modification. Lufthansa noted that it did not benefit from the collection of the tax and immediately corrected the problem, including by issuing refunds for nearly all affected tickets.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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