Following up on her previous blog posts, Hospitality, Travel and Tourism practice team member, Judy Endejan, shares the latest legal developments in the battle over negative on-line reviews. Thank you, Judy! – Greg
The latest skirmish between businesses and negative on-line reviewers resulted in a win for TripAdvisor. On December 30, 2014 an Oregon trial court ruled that Oregon’s Shield Law protects TripAdvisor from having to disclose the true identity of a poster on its on-line reviewing service. The Ashley Inn, from Lincoln City, sued TripAdvisor reviewer, “12Kelly,” who posted several scathing reviews about the Inn. The Ashley Inn sought to compel the identity of “12Kelly.” A Multnomah County circuit judge refused to do so by applying Oregon’s Media Shield Law, ORS 44.520. That statute protects a reporter from having to disclose the source for information used to prepare a news report. The court found that the Shield Law protected TripAdvisor because it is a “medium of communication.” Hence, TripAdvisor did not have to disclose the identity of its “source” - “12Kelly.”
This case is significant because this is one of the first rulings to apply a state media shield law to preclude the identification of an anonymous on-line reviewer. Traditionally, a shield law protects reporters from compelled disclosure of confidential information or sources in state court. (There is no federal shield law yet.) The policy behind a shield law is to further First Amendment goals by protecting the news gathering process, thereby enhancing the free flow of information. This process can depend upon information from anonymous sources. Without protection against disclosure, such sources may not come forward with information of great public concern.
As a result of the trial court’s ruling, the Ashley Inn cannot proceed with its defamation case because it cannot discover the party responsible for the alleged defamation in the bad review. The Inn’s owners contend that 12Kelly’s negative statements were false, because 12Kelly never registered as a hotel guest, based upon what could be learned about him from the on-line reviews.
The Oregon ruling contrasts with one from Virginia currently pending at the Virginia Supreme Court. That case Yelp!, Inc., v. Hadeed Carpet Cleaning, Inc., is being closely watched because the issue in that case is whether a business owner can unmask an anonymous blogger that posted specific critical reviews of his carpet cleaning company. However, the Virginia ruling appears based on a Virginia statute, and not upon a shield law. That Virginia statute requires only that a business prove that a negative review is, or “may be defamatory,” or that it has a legitimate good-faith basis for believing that the review is defamatory in order to learn the identity of the reviewer. Hadeed Carpet Cleaning presented evidence that could prove that the seven negative reviewers were not actual customers of the carpet cleaners, which the court found could mean that the reviews could be defamatory.
We will report the Virginia Supreme Court ruling once it is handed down, but the Virginia case may be an anomaly because courts seem more inclined to do what it takes to preserve the freedom of on-line reviewers to post comments, as in the recent Oregon decision.
The hospitality industry regularly faces tremendous challenges, ranging from unexpected tornadoes to salmonella lurking in organic eggs requested by guests. However, negative reviews on TripAdvisor.com or similar sites pose particularly perplexing challenges. Should the business respond or ignore them? Our newest post from Judy Endejan, discusses the latest legal developments regarding negative on-line reviews. Thank you Judy! – Greg
Further, it’s very hard to strip a consumer of what many view as a fundamental First Amendment right to criticize. Recently consumer groups have sought legislation that would prohibit businesses from stifling consumer reviews unless a consumer has expressly waived his or her right to give an opinion. Such legislation is pending in California.
So what is a business supposed to do about a false, negative review? That depends on whether it can identify the negative reviewer and whether the review contains legally actionable statements. The First Amendment protects clear statements of opinion as long as the statement contains sufficient facts for a reader to know the basis for the opinion. When an “opinion” implies the existence of undisclosed defamatory facts, it is actionable. For instance, a review that contains hyperbolic, figurative language, such as “the place was a trainwreck” is generally viewed to be opinion and not defamatory if it explains why the reviewer came to that conclusion. In contrast, reviews that contain provable false statements of fact may be actionable. An example of this might be a review that states “the hotel lied about its cancellation policy,” when the cancellation policy is clearly disclosed in multiple places such as on its web-site, in confirmation letters and posted at the front desk. In one recent case, Neumann v. Liles, the Oregon Court of Appeals allowed a defamation action to go forward against a wedding guest who posted a negative review on google.com about the wedding venue. The Court found that the review contained factual statements that were wrong. The Oregon Court found that the fact a plaintiff -business is public does not make the plaintiff a public figure, which makes it easier to prove defamation. Otherwise if the plaintiff is a public figure the plaintiff must present evidence of actual malice, which means knowledge of falsity or reckless disregard of whether a statement is false.
This month a Lincoln City hotel owner took advantage of the Neumann ruling by suing an anonymous tripadvisor.com user that posted a negative review that stated, among other things, “the owner smokes weed” and the front desk attendant “had phone sex with someone.” The Lincoln City hotel owner may have a hard time discovering the identity of the anonymous reviewer, however. The First Amendment right to free speech includes the right to remain anonymous. Website owners are extremely reluctant to cooperate in disclosing the identity of reviewers, if subpoenaed by a plaintiff in a defamation suit. Any subpoena issued by a plaintiff’s attorney will likely be met with a motion to quash. The right to remain anonymous is not absolute, however, and a business can succeed against a motion to quash, if it meets certain criteria that will vary from state to state. For instance in Arizona, the plaintiff must show that (1) the anonymous speaker has been given adequate notice and a reasonable opportunity to respond to the subpoena; (2) the plaintiff’s cause of action could survive a motion for summary judgment for defamation on the elements of the claim, independent of the identity of the anonymous speaker; and (3) a balance of the parties’ competing interests favors disclosure, i.e. issuance of the subpoena to obtain the identity of the speaker. Other jurisdictions, such as Washington D.C., require a plaintiff to prove that there is direct financial injury caused to the business by the alleged defamation.
While a business may be able to sue the reviewer it cannot sue Tripadvisor.com, and other sites such as Yelp. Congress enacted Section 230 of the Communications Decency Act that shields these from liability, as long as they are simply a platform for messages created by others.
Legal developments continue to swirl over the ying and yang of negative on-line reviews. On the one hand, many businesses have a legitimate concern about stopping unfounded false, negative reviews that will harm their business. On the other hand, consumers now view it as a God-given right to express their opinions about businesses in the many on-line forms that exist today. So stay tuned for further developments.
A recent Virginia court of appeals’ decision, including allegedly false reviews on Yelp!, have drawn a lot of attention to false reviews and hoteliers and restaurateur’s options for responding. Our newest post from recent Garvey Schubert Barer addition, Judy Endejan, looks at the Virginia decision and offers vendors some practical advice on managing their social media reputations. We are thrilled to welcome Judy and the extensive communications and First Amendment expertise she brings to GSB. Welcome Judy! - Greg
A common modern headache most hoteliers and restaurateurs face is a negative review that torpedoes the room, the food, or the room service to be posted by an anonymous blogger on Yelp!, or any one of the other well established user review websites or blogs. How should you react?
First, do not overreact. If the negative review is far outweighed by positive reviews, most readers will give little weight to an outlier, concluding that the poster either had a fight with his or her partner or a cosmic headache.
Second, analyze the review. If the review appears to contain false information that needs to be corrected, you have a different path than if the review, viewed overall, appears to be nothing but a statement of opinion. In the latter case, frankly, there is little that you can do because the First Amendment protects a statement of a personal opinion about a business that they patronized. The review must tell the reader, however, the factual assumptions upon which the opinion is based. The First Amendment does not protect a statement of opinion that is based upon an undisclosed or false statement of facts.
Defamation litigation is problematic from many standpoints. First, defamation litigation might cause a “Streisand Effect” – meaning that your lawsuit against an anonymous blogger might generate far more publicity than any publicity possible from the negative review. This could be bad for business.
Second, you will face several hurdles in a defamation action. The first hurdle will be to discover the identity of the anonymous negative reviewer. Yelp! defends against disclosing the identity of its users quite vociferously. Recently it lost a case at the Court of Appeals of Virginia (Yelp!, Inc. v. Hadid Carpet Cleaning, Inc., Record No. 0116-13-4). There, the Court applied a special Virginia procedural statute targeted at unmasking anonymous bloggers and upheld a contempt order against Yelp!, when Yelp! refused to identify seven anonymous bloggers that posted specific critical reviews of the carpet cleaning company. The Virginia statute has a lower standard for protecting anonymous speech than those adopted in other leading cases regarding unmasking internet bloggers. The Virginia Court did not follow these leading cases, Dendrite International, Inc. v. Doe #3, 775 A 2d 756 (N.J. Super Court App. Div. 2001) or Doe v. Cahill, 884 A. 2d 451 (Del. 2005), which impose a fairly strict standard for a defamation plaintiff to pass. Under Dendrite and Doe, the plaintiff has to provide evidence that substantiates that the speech was tortious (i.e., defamatory) or otherwise illegal to overcome First Amendment protection of anonymous speech, which requires a compelling state interest. The Virginia Court applied the Virginia statute, which has a lower burden, requiring only that you prove, among other things, that the review is or “may be” defamatory, or that you have a legitimate, good faith basis for “believing” that the review is defamatory. In the Virginia case, the plaintiffs presented evidence that could prove the seven reviewers were not actual customers of the carpet cleaner. The Court reasoned that if the reviewers weren't customers, then whatever they said must have been false, hence defamatory.
While the Virginia case may indicate some easing of the burden for getting redress against a negative Yelp! review, that case is based on a specific state statute and should not be viewed as having universal application in other parts of the country.
Even if your business could succeed in unmasking the identity of a negative reviewer, you still face the considerable burden of proving that the speech was libelous, which is subject to other constitutional burdens. In some states, like Washington and California, anti-SLAPP statutes allow a defendant to test the strength of a plaintiff’s case for defamation by requiring the plaintiff to prove why it will win at an early stage of the litigation. If the plaintiff can’t do that,the plaintiff has to pay attorneys’ fees and a possible penalty to the defendant.
In sum, before considering a litigation option, your business will need to think long and hard before undertaking the burdens associated with it. In the end, the best way to deal with a negative review is to bury it among positive reviews.
For those readers and followers unable to attend last month’s AHIA Fall Meeting in Los Angeles, we have posted below our PowerPoint presentation, “On-Line Distribution: Overview, Issues and Tips.” A huge thanks to AHIA for hosting us last month.
Corporations like Google and Facebook collect incredible amounts of information about their users, and this summer saw confirmation of widespread surveillance of private citizens by the U.S. National Security Administration. Between government and corporate information collection, privacy experts have gone so far as to say that privacy on the internet no longer exists. As data collection has become ubiquitous online, privacy regulators and other enforcement authorities such as the Federal Trade Commission (FTC) have become more interested in reviewing websites’ and web applications’ privacy policies. These authorities require or strongly encourage, depending on the jurisdiction, website and app operators adopt and publish privacy policies that inform users of the information they collect and how they use it. Indeed, California Governor Jerry Brown recently signed into law new provisions of California Online Privacy Protection Act (CalOPPA), which require website operators and online services to notify users whether other parties may collect information across different websites and disclose how they respond to web browsers that do not track signals. Given the increased scrutiny being given to privacy policies and the size of the penalties levied for not complying with applicable laws in this area, it is surprising that so many websites and apps have inadequate policies or none at all.
Under law and as a best practice, website and web application operators (including those in the Hospitality industry) should publish—and adhere to—privacy policies that tell users how the operator collects, uses, and discloses their personal information. Good privacy policies advance the core principles of privacy protection: they give users notice; let users choose what information is collected and how it is used; let users access information about them; tell users, correctly, that the operator takes reasonable steps to keep their personal information secure; and give users means to address their concerns. Moreover, good privacy policies meet the dual goals of being both thorough and accessible to the average user. Unfortunately, most privacy policies fall short of these goals.
While evolving technologies and changing laws can make it difficult to keep up with the most recent requirements, the Sweep makes clear that “keeping up” is not the real problem. Rather, it’s having a policy and complying with it. This is of particular concern for companies in the Hospitality industry. Not only do they have access to huge amounts of customer data, much of which is collected online, but the Hospitality and Food and Beverage industries are primary targets for data breach, accounting for roughly 33% of the data breaches in 2012. This makes it more important than ever that companies in Hospitality sector adopt meaningful privacy policies and comply with them.
The results of the Sweep and the compliance actions initiated by the FTC and others of late, make clear that this is no easy matter. Still, the first step is to adopt a policy that not only meets statutory requirements, but can and will be implemented. Recommendations for drafting better policies are listed below:
- Privacy policies should present information in a way that is easily readable to the average person. They should use plain language and concise explanations rather than lengthy and confusing legalese. Similarly, links to privacy policies should be both functional and easy to find.
- Policies should fully inform users about all information the operator collects, including data that is collected behind the scenes such as the user’s IP address and information collected from browser cookies.
- Policies should tell users about simple and effective methods to protect their personal information by, for example, opting out of providing data for certain purposes or requesting to access or challenge the accuracy of the operator’s data about them.
- Policies should adhere to applicable laws, such as California’s Online Privacy Protection Act of 2003, as well as FTC guidance. Operators should stay informed about legal developments both in the U.S. and internationally, and update their policies when necessary.
- Policies should include up-to-date contact information for the person(s) responsible for the operator’s privacy practices.
Online data collection in the United States shows no signs of slowing. Nor do attempts to gain access to that information or penalties for failure to protect it. While companies in the Hospitality industry may not be able to stop the onslaught from outsiders determined to hack their data, they can take steps to reduce their exposure from claims by regulators and others that have failed to meet their obligations to consumers by adopting (and complying with) privacy policies that allow their users to make educated decisions about what they disclose and how they allow their information to be used. To comply with applicable laws and guidance, these policies should be as accurate, thorough, and clear as possible.
Hunting for a top-rated hotel or searching for the perfect dim sum restaurant? Chances are you will turn to sites such as Yelp, Citysearch, or TripAdvisor to guide you through the mass of options most locations have to offer. As the Huffington Post recently noted, “In an increasingly tech-reliant world, most of us do not step foot in a restaurant or buy anything online without doing at least a modicum of Internet research.”
Hoteliers and restaurateurs have long known that positive online reviews equal greater occupancy rates, increased bookings, and greater revenue for their businesses: An influential 2011 Harvard Business School (HBS) study found that “a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenue” for restaurants, while researchers at Cornell found that a one-star swing in a hotel's online ratings on travel sites equate to a 11% sway in room rates.
So how trust-worthy are those 4-star online reviews? Turns out, unsurprisingly, caveat emptor.
A 2013 HBS report estimates that the number of fraudulent reviews on Yelp rose from 5% in 2006 to 20% in 2013.
While businesses may think that asking clients or friends to post positive reviews online is simply the cost of doing business in the internet age, the law says otherwise. Regulators are catching on to businesses that artificially inflate their online reputations and are seizing the opportunity to bust companies that hire or solicit positive “fake” reviews. Recently, the New York Attorney General’s office announced it had reached agreements with 19 companies to cease their misleading practices of posting fake reviews online. To the tune of $350,000 in penalties. This was after New York Attorney General, Eric T. Schneiderman, conducted a year-long investigation into consumer-review sites, finding that New York businesses had bribed clients to write fake reviews in exchange for gift certificates, hired overseas bloggers to post positive reviews, or took to the message boards themselves to defend their “false advertising” practices. Schneiderman calls this practice of disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review is a form of false advertising called “Astroturfing.” And Schneiderman suggests that prosecutors should step up and help put an end to the practice.
In addition, review sites are fighting back in an effort to protect their reputation. Yelp, for example, has a page dedicated to explaining its policy of outing false reviews by using sophisticated software to weed out spammers. Yelp has even sued a California law firm for posting bogus reviews.
The end game is that by producing fake online reviews, businesses may not only violate state laws prohibiting false advertising and illegal and deceptive business practices, but they may also incur significant penalties and their reputation may be irreparably harmed. (Schneiderman listed the names of all of the business online who were involved in the New York sting operation.)
If you are a hotel or restaurant owner, resist the urge to spruce up your online reputation by solicitation of—or by penning your own!—positive reviews, no matter how benign you think the practice may be. And if you are a consumer, remember: not everything you read on the internet is true.
If you have questions about how your online practices may violate state law, contact Greg Duff.
National travel and technology industry experts explored technology trends, challenges and opportunities in the travel industry at the second annual TNT Conference last Tuesday, October 1 in Seattle. The TNT Conference featured industry leaders sharing thoughts and ideas about the future of how emerging technologies will impact and shape the hospitality landscape. The Conference featured two expert panels of users and suppliers that focused on big data and the distribution of content. Following the panels, a Pundits Panel, consisting of consultants and investors, shared reactions and insights on the content that is summarized below. Culminating the Conference was a competition that featured Northwest companies that have developed cutting edge technologies focused on the travel and tourism sector. The Conference judges heard presentations from buuteeq, dwellable, Poached, MovingWorlds, dealScoopr, and Appetas, all competing for the evening’s awards for Best Overall Pitch and Best Investment Opportunity.
Below are highlights from the panel discussions.
Big Data – The Power of Content
Moderator, Scott Warner of Garvey Schubert Barer, focused the panel on an overarching question - What’s important and how do you use the data that’s being collected?
- Mike Blake, of Commune Hotels, addressed the challenge of using data to make an organization more efficient by developing the big picture view of how to manage the vast amounts of available information at our fingertips. He used the analogy of the “two car accident”…if you’re above the traffic in a helicopter, you could probably predict when the accident was going to happen.
- Other challenges posed by the panel included knowing what data to collect, what informative questions to ask and who are the right people to ask.
Challenges of big data?
- Privacy. Where do you draw the line between intimate and creepy?
- Distribution. How do we take the data and share it to make it relevant to the hotel, front desk, and the staff?
- Maturity. We have the infrastructure but not the maturity to handle big data.
- Utilization. We have the power of big data but we’re only using “medium data.”
How do you make it relevant to people that need to consume this data?
- Storage is relatively inexpensive these days so collect and save everything and come back to it when you need it.
- Figure out what questions are rising to the top and start looking for trends, which then opens up the ability to start asking the right questions.
- Arm your staff with information so they can treat VIP guests appropriately.
- Take advantage of the “click through” information on websites. Every website should have browser and IP address information. Leverage this information to create a good customer experience.
Structured v. unstructured data?
- Data co-ops need to look outside their own industry and start sharing information much like the retail industry. It’s for the betterment of the company and customer experience.
- Understand the market from the entire industry and not just from your specific market.
- ALL of your information is currently being collected such as credit cards, shopping habits and spending.
- Walk before you run – first get structured data in order, then think about adding more data.
John Burns, of Hospitality Technology Consulting, moderated this panel focused on distribution including the challenges and disruptions.
What are the latest generational technologies?
- “Pop unders” are similar to pop ups and occurs when a customer hits the “leave button” on a website and directs you to another related site. The goal is to turn shoppers into buyers.
- User interface can now change and adapt to the varying screen sizes (from phone to tablet to laptop to desktop), which is a very simple concept to wrap your head around, but difficult to implement.
- Mobile. 50% of business is now coming from mobile devices and tablets and it’s growing exponentially, especially in other countries like Japan and Asia Pacific. Your mobile phone is now your credit card, room key, and plane ticket. Apps are now primarily being designed for mobile.
- Keeping up! This technology will not slow down; it will only get more complicated. Those working in the field probably need to become experts on this new way of doing business.
- The new iPhone 5 has more computer power than when NASA landed on the moon in 1969. Now we are carrying this thing in our pocket and thinking nothing of it.
The idea of globalization?
- You must think globally.
- Think about IP issues, antitrust, pricing, and maintenance.
- Hire teams on the ground in other regions.
- Understand what customers in other regions are looking for.
- Wherever you are in the world, there’s data that can help you in any market. The power of big data allows you to leverage information and respond centrally.
What to expect looking forward?
- Distribution. We’re going to see more programmatic marketing solutions enabling industries or corporations to take advantage of new technology.
- Volumetrics and more biometrics.
- Increase in coding skills. Expect to see 200 more hotel apps in the next two years
- Continued industry consolidation (think William Shatner of Priceline, Booking, Kayak, and Travelocity).
The Pundits' Reaction
This panel was moderated by Rich Siegel, of Hospitality Upgrade.
- For a long, time data wasn't in a hoteliers’ job description, it was centered on accommodation. Now it’s becoming part of the job.
- Make the data easily accessible to your employees for better customer service. Know your clients. Connect the data and implementation.
- Aggregate. Normalize. Then make the information visible.
- Privacy is dead. The younger generation doesn't understand the idea of privacy.
- Draw the line between creepy and courteous. Don’t scare your customers. Just because you can, doesn't mean you should.
The Pundits' reaction was followed up by the awarding of Best Overall Pitch and Best Investment Opportunity. Drum role please…MovingWorlds, a company that helps customers donate their professional skills worldwide, won Best Overall Pitch and Appetas, a company that designs affordable websites for the restaurant industry, won Best Investment Opportunity. Congratulations to both companies. Conference attendees agreed that we will see great innovation from both of these companies in the future!
On behalf of Zino Society and Garvey Schubert Barer, I would like to thank all of the participating companies: Appetas, Clairvoyix, Commune Hotels, Digital Alchemy, Benchmark, Hipmunk, Thayer Ventures, Google, Roomkey, Tnooz, Concur, Jon Inge & Associates, Expedia Media Solutions, Voyager Capital, Hospitality Technology Consulting, nSight, Travelport, buuteeq, dwellable, Poached, MovingWorlds and dealScoopr. A special thank you to our 2013 sponsors: Clark Nuber, GeekWire, Guestware, and Hospitality Upgrade.
To view pictures from the 2013 TNT event, click here.
To read about 2012’s Conference, click here.
Everywhere you look consultants and industry experts are making the case that businesses of all stripes should be moving their IT services to the cloud. This applies to the hospitality industry more than most given the features of the industry, including high infrastructure costs, data-heavy applications, consumer demand for access to cutting-edge technology, pressures of customer service, and the need to share resources across dispersed properties. And there’s good reason to heed this advice. After all, the cloud is no longer an experiment; it is a well-established solution with some pretty compelling benefits: cloud users reduce their IT spend and labor costs, increase efficiency and improve customer satisfaction. Not to mention that more than half of U.S. businesses are now using the cloud, with that number expected to increase substantially by 20152... Read the full article here.
The travel industry is experiencing a technology renaissance. Long gone are the days of checking in at the airline counter or calling for a hotel reservation. Where is the future of travel going and how are emerging technologies changing the landscape? Our second annual TNT Conference will showcase emerging Northwest companies with cutting edge technologies, as well as three expert panels featuring industry users, suppliers, and consultants to explore how these new technologies will affect the industry, and to discuss the value and use of data/content and distribution. View the 2013 agenda here.
October 1, 2013 at Bell Harbor Conference Center
12:30pm-5:00pm TNT Program
Who should attend?
- Anyone in the travel and tourism industry who would like to explore industry trends and learn about new technologies.
- Entrepreneurs and investors who are engaged in travel, tourism or technology.
Participating companies include:
- Commune Hotels
- Digital Alchemy
- Thayer Ventures
- Jon Inge & Associates
- Voyager Capital
- Hospitality Technology Consulting
- nSight | Humanizing Travel Intelligence
Opportunity for Entrepreneurs to Pitch
There will be an opportunity for 5-6 companies seeking funding in the travel, technology and hospitality business sectors to pitch in front of the expert panels, and around 150 angel investors and business professionals in attendance. Each presenting entrepreneur will have the chance to gain feedback from expert panelists following their 5 minute presentation. The cost to apply is $100, which includes attendance at the event. To be eligible for investment consideration in the ZINO Annual Angel Investment Fund-2013, LLC, entrepreneurs will be required to become ZINOpreneur Members which in addition to pitching at TNT, will also include an opportunity to pitch at an upcoming ZINO Society investment forum plus additional screening, coaching and networking opportunities. Please contact Meg Landies, email@example.com or 206-686-3768 for details.
The TNT Explosive Idea Awards
The Judges’ Award for Best Investment Opportunity and People’s Choice Award for Best Presentation will be presented at the conclusion of the Conference.
Interested in sponsoring the event? Please contact cdann(at)gsblaw(dot)com for more information.
Thank you to Benjamin Lambiotte, technology and transportation attorney at Garvey Schubert Barer, for providing our readers with the latest and greatest on mobile payment technology and its uses in the travel and tourism industry. - Greg
As e-commerce continues its evolution to mobile or “m-commerce,” the travel and hospitality industry is at the center of a clash of mobile payment titans. Pack leaders in “near field communications” (NFC)-based mobile payment solutions at present include Google Wallet and Isis, a joint venture among major mobile carriers like AT&T, Verizon and T-Mobile. Generally, NFC technology enables the user to store customer and credit card account information and effect wireless monetary transactions and data transfers between two devices, eliminating the need to carry or present a credit card or fill out lengthy forms online. The potential for the travel industry as an alternative or adjunct to physical credit card transactions is clear and obvious. Every mobile device essentially becomes a point of sale and a transaction can be charged to a credit card account with a simple wave of the device.
Amid considerable fanfare, Travelocity announced that it will integrate Google Wallet into its booking application for the Android platform. Google has announced that Alaska Air has integrated Google Wallet Objects API (which permits loyalty and coupon programs to be integrated into a vendor’s mobile commerce app). Both Priceline and Alaska Air participated in demos at Google’s annual developer conference this month. One advantage of the Google solution is that it is integrated into and able to leverage the broader Google “ecosystem,” including maps and Google+.
The travel industry presents distinct challenges along with this tremendous potential. Coupons, loyalty and reward programs are ubiquitous, and most frequent travelers participate in many such programs, often represented by multiple cards or accounts. One problem mobile payment providers are wrestling with at present is “banking in” means of transferring, recording and tracking multiple coupon and loyalty program “credits and debits.”
Another major obstacle is that, at present, Google Wallet will not work on Verizon and T-Mobile devices. Those carriers, along with AT&T, are backing a competing digital wallet technology known as Isis, which is currently available for use only on a pilot basis in two US cities. There have been proceedings at the FCC about the legality of Verizon’s efforts to block Google apps, and these are likely to continue and eventually spill into the courts. In 2012, Verizon agreed not to block downloading of most apps (with some exceptions) in a consent decree with the FCC in a case involving Google Play gaming application. Verizon’s blocking of Google Wallets has been challenged before the FCC as a violation of that consent decree. According to the position Verizon has taken before the FCC, Google Wallet uses the "secure element" on devices to store a user's Google ID which is again, according to Verizon, a secure and proprietary piece of hardware distinct from the device itself. Verizon denies that its participation and support for the Isis solution is the reason why Google Wallet will not work on its devices, but many are skeptical of Verizon’s motives.
Also, the airline industry has been grappling with convenience and security issues presented by certain applications of NFC technology, including payment and boarding passes. The IATA has formed a task force that is expected to complete its review of NFC technology and propose standards to its 240 airline members in October 2013. IATA is examining six major uses for NFC: to enable passengers to tap NFC mobile devices at check-in, security checkpoints and gates; to drop off bags and enter lounges; and to make payments for on-board meals and ground transportation. It issued a joint report with a mobile device industry trade group in 2011 that was viewed as favoring security provided by SIM chips on the devices themselves, as opposed to other means such as dedicated chips, tag reading and peer to peer. The goal is to enable single “tap and go” processing, with no data entry or keystrokes. It remains to be seen whether the final “Fast Travel” task force standards will continue to express a pro-SIM security bias.
Despite technological challenges, some degree of uncertainty and legal wrangling, it is clear that major players in the travel and hospitality industry are positioning themselves to take advantage of the m-commerce environment. Observers continue to debate how transformational m-commerce technology will be in the industry, and who the winners and losers will be, but no one doubts that major changes driven by emerging mobile transaction processing solutions and standards are coming soon.
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.