Booking.com Wins Appeal, Israeli Consumer Authority Fine Canceled
Online accommodation giant Booking.com has successfully appealed a significant fine of 2.56 million shekels imposed by Israel's Consumer Protection and Fair Trade Authority. The Jerusalem Magistrate's Court canceled the penalty, which was levied because the company initially displayed Israeli accommodation prices without including Value Added Tax (VAT).
The case originated in 2018 when a similar fine was issued to Booking.com's Israeli subsidiary. It was then determined that the Dutch parent company, not the Israeli branch, was responsible for the pricing display. While earlier appeals by the Israeli subsidiary were successful up to the Supreme Court, which ruled that a company that did not directly violate the law could not be penalized, the Consumer Authority then pursued the Dutch entity directly.
In October 2021, Booking.com received notice of intent to fine, and in September 2022, the 2.56 million shekel penalty was imposed. The Authority argued that Booking.com violated consumer protection law by failing to display the full price, including VAT, on its website and app, instead using small disclaimers and only revealing the total cost later in the booking process. The Authority calculated the fine based on 97 alleged violations, each carrying a penalty, with adjustments for previous offenses.
Booking.com contested the fine, arguing that as a foreign company, Israel lacked jurisdiction, and that its terms of service stipulated Dutch law. Crucially, however, the company also argued that Israeli law did not adequately address situations where different total prices might apply to tourists versus Israeli residents. The court rejected the jurisdictional and choice-of-law arguments, affirming that a foreign company operating in Hebrew and marketing Israeli hotels was subject to Israeli consumer law.
However, the court ultimately sided with Booking.com on the penalty itself. The judge noted that even the Consumer Authority struggled to find an optimal way to display prices accurately for all users, acknowledging Booking.com's proposed solution of showing VAT-inclusive prices to Israeli IP addresses and VAT-exclusive prices to others. The court concluded that given the legal ambiguity and the Authority's own difficulties in enforcing the law perfectly, imposing such a substantial financial penalty was unjustified. The court also pointed to flaws in the Authority's calculation of the number of violations and noted that the Authority had not issued a preliminary warning, despite this being the first such penalty against a foreign corporation. The fine was canceled, and the Authority was ordered to refund the payment and pay Booking.com 35,000 shekels in legal costs, though the court clarified that the cancellation did not absolve Booking.com of the initial violation.
