Under the partnership, Orbitz passed customers' credit card information to Trilegiant without notifying consumers. Orbitz terminated the practice starting in 2008, but a judge says Orbitz still has to make the payments that the contract called for.
The dispute relates to a 2005 marketing contract between Orbitz and Connecticut-based Trilegiant in which Orbitz users would book a flight or hotel and then receive an offer to buy additional travel-related services without having to re-enter their payment information.
Under the multiyear marketing pact for this service, called DataPass, Orbitz would transfer users’ payment information to Trilegiant without giving any notification to consumers, and then Trilegiant would process the transactions.
This practice and similar ones that violated consumers’ privacy rights were banned in 2010 through the federal Restore Online Shoppers Confidence Act.
The 2005 Orbitz-Trilegiant Datapass marketing contract contained a clause that gave Orbitz early termination rights, but it would be obligated to make quarterly payments through 2016 totalling nearly $18.5 million.
Orbitz indeed terminated the contract at the end of 2007, made quarterly termination payments through June 30, 2010, totaling $6.2 million, but ceased making any payments after that.
Trilegiant brought the matter to the New York Supreme Court, alleging breach of contract, and seeking the remainder of the payments, while Orbitz countered that it was no longer liable for the payments because the marketing practices in question are now illegal.
Judge Charles E. Ramos rejected Orbiz’s motion for summary judgment and sided with Trilegiant, ruling that the federal law, the Restore Online Shoppers Confidence Act, does not make the 2005 Orbitz-Trilegiant marketing agreement unenforceable because the DataPass arrangement was terminated at the end of 2007, and enforcing the contract and payments wouldn’t require the companies to commit illegal acts.
For now, at least, Orbitz would seem to be liable to make more than $12 million in additional payments to Trilegiant.
An Orbitz spokesperson, however, tells Skift that in its view the case is not disposed of because the summary judgment it sought was only one of its defenses, and it has additional defenses of its position to make.
Trilegiant is the successor company to Cendant Membership Services and currently operates Travelers Advantage, a membership club, among others in other industries.
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Photo Credit: A judge ruled that Orbitz still has to pay a marketing company more than $12 milion for discontinued practices that violated customers' privacy rights. PlaceIt by Breezi