Ritz-Carlton could face legal action after ‘CIAA service charge’

Patrice Wright’s receipt for four drinks and sweet potato fries from the lobby lounge of the Ritz-Carlton in uptown Charlotte during CIAA week shows a $10.20 CIAA service charge.
Patrice Wright’s receipt for four drinks and sweet potato fries from the lobby lounge of the Ritz-Carlton in uptown Charlotte during CIAA week shows a $10.20 CIAA service charge. WBTV

The N.C. Attorney General’s Office says it will take legal action against the Ritz-Carlton in uptown after the hotel added a CIAA service charge to customers’ bills during the February basketball tournament.

At issue is the 15 percent CIAA gratuity the Ritz-Carlton imposed on customers who patronized the lobby and bar. The attorney general’s office contends the hotel violated state law by failing to inform customers of the service charge. Some of the customers unaware of the charge included an additional gratuity when they paid their bills, according to a draft of the legal complaint.

The agency’s Consumer Protection Division wants a judge to bar the hotel from automatically imposing charges without disclosing it first. The agency also is requesting restitution and refunds for customers who paid the fees.

It’s the first time the state agency – headed by Attorney General Roy Cooper – has sought legal action against a North Carolina hotel for such a surcharge, said spokeswoman Noelle Talley.

In a letter to the hotel’s attorneys, Special Deputy Attorney General Harriet Worley wrote: “We began discussing this issue more than two months ago, and, at this point, the issues and concerns we have raised remain largely unresolved...In our view, the Ritz Carlton has not taken sufficient steps to fully address the issue and to ensure that this type of problem does not occur going forward.”

In an emailed statement, the Ritz-Carlton said it was surprised to learn the attorney general’s office thinks the hotel is not interested in “expeditiously” resolving the issue, and that it remains optimistic a resolution can be found. The statement said hotel representatives had met with with the Attorney General’s office several times and responded to all information requests.

According to the complaint, the hotel on Feb. 27 added the charge, labeled “CIAA SVC CHRG,” onto customers’ bills without indicating the percentage or amount they would be charged. The next day, the “CIAA” acronym was dropped from the gratuity’s label.

The charge had never been levied against customers in the past, and the hotel did not “clearly and conspicuously” tell patrons it would be added to their bills, according to the complaint.

As a result of the bill, the complaint says, some customers thought the CIAA received some or all the proceeds of the surcharge. But the athletic association did not profit from the gratuity, and was unaware the hotel was adding the charge to bills.

The Central Intercollegiate Athletic Association is the oldest African-American athletic conference in the nation. It has hosted its tournament in Charlotte since 2006 and last year had a $50 million economic impact in the city, said Laura White, spokeswoman with the Charlotte Regional Visitors Authority.

The CIAA plans to move the tournament’s headquarters from Hampton, Va., to Charlotte this year after the CRVA agreed to give the association $100,000 for moving expenses and part of its rent.

White said on Thursday that relocation plans are still in the works. Efforts to reach the CIAA were unsuccessful.

The attorney general’s office plans to file its complaint in a state court within the next two weeks.

The hotel received a backlash of criticism after customers complained about the gratuity. The Attorney General’s Office began an investigation and encouraged patrons to submit complaints. By Thursday, the agency had received complaints from seven customers who paid the surcharge, said Talley, the spokeswoman.

The hotel apologized for the service charge, saying it did not intend to offend customers. The hotel later said the gratuity was distributed in full to the servers who worked the event.

But Patrice Wright, the Mint Hill woman whose interviews with local news media first brought attention to the surcharge, said she has yet to receive an apology or a refund.

“Instead of saying ‘I’m sorry, we shouldn’t have done it that way,’ what was said was, ‘I’m sorry but most of the patrons understood the charge,’” Wright said, quoting the hotel. “I would like an apology. A sincere apology.”

When they visited the hotel, Wright and her husband paid $83.81 total – including a $10.20 “CIAA service charge” – for their meal. “We did not know about (the surcharge) until we received our bill,” she said.

“In a generation where race relations are heightened...I think this speaks volumes that somebody understands that we were economically discriminated against,” Wright said. “It also says that large corporations have to abide by the rules. And when they don’t...government will step in to ensure that they are treating all people fairly.” Staff Writer Katherine Peralta contributed.

McFadden: 704-358-6045; Twitter: @JmcfaddenObsBiz

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