Taken for a Ride

Here's what William Shatner won't tell you about Priceline.

PART 1 | 2

WITH NINE CHILDREN underfoot and another on the way, Christa and Grant Johnson had elevated saving money to an art form. It's no wonder then that the campy ads for Priceline.com (PCLN), showing William Shatner riffing about the wonders of "naming your own price," got their attention. When the Sacramento couple decided to treat Christa's parents to a trip down from Boise, Idaho, for the birth of the family's tenth child, Grant logged on to Priceline.

He knew the deal: He had to agree to flights leaving anytime from 6 a.m. to 10 p.m. and to the possibility of a layover. But it was such a short flight, he figured there was no way his in-laws would get stuck with changing planes.

Southwest had already quoted him $170 per ticket, so he bid $100 on Priceline. Rejected. He tried $130. Again, rejected. Finally, at $150, his bid was accepted. Not a huge savings, but hey, 20 bucks is 20 bucks. Or is it? Once taxes and fees were totaled in, the bill wound up at $190 per ticket -- more than if he'd bought them from Southwest. (He admits he hadn't checked out what was then a "tiny link at the very bottom of the page" warning of added costs.)

The itinerary he got was awful. Christa's elderly parents had to fly past their destination to San Francisco, then back up to Sacramento -- in a turboprop plane, arriving at close to 11 p.m. When they got in, the exhausted grandparents practically stumbled onto the tarmac with their luggage. Christa was so concerned she got a wheelchair to shuttle her mother from the remote gate.

Grant had booked a three-week trip to make sure they'd have plenty of time with the newborn and the worn-out mother. But as it turned out, the baby came two weeks late, four days before the grandparents had to leave. Ordinarily, they could have just paid the airline a $75-per-ticket fee and changed the departure day. But not with Priceline. No refunds, no changes. The Johnsons made an appeal, but Priceline wouldn't budge. A supervisor "was chewing her food the whole time we talked, and then actually yawned at us," says Grant. "They weren't at all upset that we were upset."

Instead of beating the system, Grant and his wife wound up feeling as if they got taken for a ride. "You feel so abused," says Christa, "but gosh, we were so stupid in retrospect. If it sounds too good to be true, of course it is."

Feeling abused. It doesn't take a market-research team to determine that's not the ideal customer response. But as consumers flock to Priceline in hopes of scoring deals on everything from groceries to gas, many are coming away with tales that have distinctly unhappy endings. Nightmarish itineraries that can't be changed. Tacked-on charges. Fruitless conversations with surly customer-service reps. Just another day in the life of a disgrunted Priceline customer.

"I asked Priceline.com for an inexpensive flight," says one posting on ePinions.com, "and they sold me a circus ride." Screams another: "Priceline! UGH!!! The name alone makes me cringe!"

Looking for a romantic getaway in Boston with her boyfriend, Penny Baron bid $135 a night and got what Priceline described as a "four-star" hotel. "When we pulled up to this bare-bones hotel, we both just looked at each other and our jaws dropped," the New York virologist says. "It wasn't much better than a Motel 6." Quipped her boyfriend, "Maybe Priceline uses an eight-star scale."

Patti McGinn also felt burned after her brush with Priceline. Accustomed to sites where she could check the itinerary before she booked, she clicked quickly through Priceline's warnings ("If an airline accepts your offer price, we'll immediately lock in your price and purchase your tickets.") and bid on two tickets to Cancún. She was stunned to see her credit card being charged $811.74. And to make matters worse, she had accidentally bid on the wrong dates. Priceline eventually agreed to let McGinn cancel the tickets -- for a stiff fee of $150 each. "It's a scam, I know it is," she fumes. "They're making money off people who don't know any better."

"There does certainly seem to be a problem with people not understanding their policies," says William Venezia, assistant director of trade practices at the Connecticut Department of Consumer Protection, which has received an uptick in complaints about the Norwalk, Conn.-based company. And at the Connecticut Better Business Bureau, "we've gotten a substantial number of inquiries about Priceline and its activities," says President Paulette Hotton. "Right now we're researching the comments. We want to determine what's happening and why."

Brian Ek, Priceline's VP of communications, points out that 35% of its customers are repeat users. "I've seen people out there who don't like the service," Ek says. "But I gotta tell you, they're in a big minority." Indeed, online chat boards are filled with Priceline defenders, brandishing their bargain prices like badges of honor.

So how much do Priceline customers actually save in return for all the tradeoffs? Not much, according to Internet market-research firm Forrester Research. Though Priceline disputes the numbers, Forrester estimates that customers save only about $25, on average, off the lowest advance-purchase airfare. And that's before Priceline's $5 service charge. "You have to ask yourself: Am I willing to sacrifice total control over my travel destiny to save $20 on my ticket?" says Henry Harteveldt, a senior analyst at Forrester. (Forrester has done work for Priceline competitors, but the company says that played no part in this research.)

"The company is based on the assumption that most people don't know the market value of what they're buying," says James Hood, editor of the Web site Consumeraffairs.com, which has received a steady stream of customer rants about Priceline. "If everybody knew what this stuff was worth, people wouldn't bid and Priceline wouldn't be able to stay in business."

Certainly the lure of the Internet has played a part in consumers' willingness to suspend disbelief. "People think dot-coms are somehow a black box, that they have some magic formula for getting bargains," says Robert Manning, a sociology professor at Georgetown University. "Just because it's a dot-com doesn't mean it can defy reality."

What Priceline can do is leverage its brand name into every nook and cranny of consumer buying. You can already "name your own price" for new cars, rental cars, groceries, mortgages and home-equity loans; soon you'll be able to score long-distance service (the company plans to route calls through underused cable), gasoline, credit cards, vacation packages, even your neighbors' junk through Priceline's Perfect YardSale. Just two years old, the company now says it handles more than 20,000 airline tickets a day -- 3% of the leisure flights sold in the U.S. Seemingly overnight, the upstart has grown from a liquidator of unwanted tickets to a company with revenue of $482 million last year and a market cap of $11 billion, larger than any of the airlines whose tickets it sells.

But as the company grows, so does the number of unhappy customers, some of whom have taken to calling it Priceline.con. "Every time I see those ads now I just want to cringe," Grant Johnson says. "I would never use Priceline again."

TRAVELERS KNOW they're in for layovers and wicked flight times when they book with Priceline. But some say its laissez-faire customer service is more than they bargained for. "We get complaints that say the customer-service people are downright rude," says Hood of Consumeraffairs.com.

Christian Conti, a senior at Wake Forest University in Winston-Salem, N.C., says one Priceline customer-service manager "basically called me an idiot." Conti booked a weekend flight home to Connecticut, leaving Friday and returning Monday. But when his bid was accepted, it showed him departing Saturday. He called to protest and says the manager told him "that their software was flawless and I must have submitted the wrong dates." Rails Conti, "I'm not just banging on the keyboard with my head, hoping a plane ticket will pop out."

For Al Case, it was bad enough that his family's return flight from a Colorado trip was slated to leave just after 6 a.m. (He had to trek to the airport the night before because the car rental agency didn't open until 7 a.m.) Then, when the Cases got to the airport the next morning -- by cab -- they learned the departure had been moved up 10 minutes. ("The plane door literally hit us on the butt as we got on," he says.) Worse, when they got to their layover in Phoenix, they learned that their connecting flight had been canceled altogether.

But what really made Case's blood boil was what happened when he called Priceline for help in snagging a new flight home. "There's nothing we can do," the rep told him. The Cases had to wait standby for four hours before they got on another flight.

Once back home in San Jose, Calif., Case got ahold of a manager, who refused to reimburse or even apologize to the weary travelers. "That's it," Case replied. "I'm taking my complaint to the Web." Thus, his site, Beware of Priceline, was born.

A month after it launched, he received a package in the mail from Priceline. Finally, he thought, breathing a sigh of relief, they're listening to me, and I'm going to get my money back for this whole ordeal. But inside there was only a $25 AmEx gift certificate and a plastic alarm clock, "like something you'd buy at Walgreen's for $3," he says. That irked him even more: "It seemed like they sent us that alarm clock just to taunt us for almost missing our flight."

According to some customers, it's not just Priceline that treats them like second-class travelers. (Airlines won't even count flights booked through Priceline toward frequent-flier miles.) Shawn Taylor found this out when she showed up at the airport, Priceline ticket in hand. Loaded down with a suitcase that would barely shut and two carry-ons, the Oak Park, Ill., woman headed to the skycap at the curb. "Sorry, lady," he said. "Can't check you in here -- you've got a Priceline ticket."

Kenny Noe, a truck driver from Scottsboro, Ala., felt the stigma, too. He booked a hotel through Priceline that turned out to be a dump. The paint in his room was peeling, the floorboards were cracked, and "they had these cloth headboards on the beds that were just filthy," Noe grumbles, "like people had laid their heads up against them for years and they had never been cleaned." Around 2 a.m., Noe woke up shivering because the heat wasn't working. The next morning, he handed in a scathing critique with his room key and was told by the staff that the hotel was planning to remodel soon. "Ordinarily," the clerk sniffed, "we'd reimburse the customer. But we're unable to because you booked through Priceline."

For his part, Priceline's Ek says customer service is a real priority for the company. Several times a year, senior managers travel to Columbus, Ohio, and Salt Lake City, where the work is outsourced, to teach on-site seminars and refresher courses about how to treat customers. Complaints that focus specifically on "ticketing issues," he says, are bounced back to the Norwalk office and dealt with by full-time staffers.

Ek says he feels "very good" about the level of customer service Priceline provides. "Any company gets complaints, but against our base of sales the percentage of complaints is very, very small. We've gotten much better at explaining the proposition, exactly what you're getting into. You know everybody thinks Priceline is some kind of magic. It's not. It's a tradeoff. There's no free lunch."