Four state attorneys general (state AGs) – Colorado, Oregon, Pennsylvania, and Texas – have announced resolutions with Choice Hotels International, Inc. (Choice Hotels), a prominent hotel conglomerate known for operating brands like Quality Inn, Sleep Inn, and Econo Lodge related to the company’s practice of charging hidden “resort” fees.

Specifically, these state AGs alleged that Choice Hotels engaged in “drip pricing”, wherein the initially advertised room rate did not disclose all unavoidable fees, including the resort fee. Choice Hotels did not disclose these fees until the last page in the online booking process or upon check-in in at the hotel. As part of the settlement, Choice Hotels committed to disclose all mandatory fees, including resort fees, on the first page of its booking website as part of the total room rate.

The state AGs scrutiny of Choice Hotels’ practice is not an isolated incident. Earlier this year, the Texas AG sued Hyatt Hotels alleging the chain charged consumers mandatory and unavoidable fees – such as resort fees, destination fees, or amenity fees – in addition to daily room rates. Similar lawsuits and settlements have been entered into between State AGs and Marriott and Hilton.

More broadly, state AGs have also reached resolutions with food delivery platforms related to their alleged failure to disclose mandatory fees upfront. At the end of 2022, District of Columbia (DC) and Pennsylvania State AGs settled with Grubhub over in-app transparency on prices and costs. DC AG’s allegation focused on Grubhub “charging customers hidden fees and using deceptive marketing techniques to increase profits.”

Why It Matters

State AGs have been actively addressing the issue of hidden and fees for some time, calling these fees unfair and deceptive when not clearly and conspicuously disclosed to customers. Federal regulators are also stepping up their efforts, with President Biden launching an initiative to crack down on junk fees. Businesses engaging in drip pricing practices may soon face a triple threat of three different regulatory regimes reviewing their practices. To avoid such scrutiny, at a minimum, businesses should clearly and conspicuously disclose all the unavoidable fees upfront the first time a price is presented in an advertisement, etc. However, best practice is to disclose the total cost and not require consumers to “do the math,” particularly because some regulators have required this in their settlements.

Troutman Pepper State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
	Clay Friedman – Co-leader Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
	Judy Jagdmann Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
	Stephen Piepgrass Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
	Avi Schick A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
	Michael Yaghi Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
	Ketan Bhirud As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
	Tim Bado Tim is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, with a primary focus on financial services litigation.
	Chris Carlson Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
	Natalia Jacobo Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
	Namrata Kang Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	Susan Nikdel Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
	John Sample John represents clients in a wide variety of general and complex litigation matters, shareholder disputes, products liability, and privacy claims.
	Whitney Shephard Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
	Trey Smith Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
	Daniel Waltz An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
	Stephanie Kozol Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.