Expedia hit with $184 million penalty say plaintiffs

CHICAGO (Reuters) - A judge ordered Expedia Inc, the largest U.S. online travel agency, to pay $184 million to customers who claimed they were charged service fees under false pretenses, the law firm representing the customers said on Monday.

The ruling, from the King County Superior Court in Washington state, agreed with customer accusations that Expedia paid taxes on the wholesale price of hotel bookings, but collected taxes from customers based on the higher retail price, pocketing the difference.

"Because Expedia only remits taxes based on the wholesale price -- which it never disclosed to consumers -- the taxes appear higher to consumers than they actually are, and Expedia is able to mask the considerable size of its service fees," said Andrew Volk, an attorney at Hagens Berman Sobal Shapiro, in a statement.

Expedia denied the accusation and said it would appeal the ruling. The court granted the customers' motion for partial summary judgment without a trial, Expedia said.

"We believe that the court's decision is wrong on the law and wrong on the facts," Expedia said in a statement.

"We are confident that we have fulfilled all applicable obligations to our customers. Because we believe that the court's decision is inconsistent with both the facts and the law, we will vigorously pursue our rights on appeal" the company said.

Expedia said the plaintiffs' claim was based on Expedia.com's "Terms of Use" that were in effect from February 2003 through December 2006.

(Reporting by Kyle Peterson; Editing by Tim Dobbyn)