Trivago faces big fine after court finds it misled consumers.

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January 21, 2020
An example of Trivago's TV advertising from 2017. Source; ACCC

Travel website Trivago faces millions of dollars in fines and costs after an Australian court ruled its claim to help users find the cheapest hotel was misleading and a breach of consumer law.

Australia’s Federal Court found that from at least December 2016, Trivago misled consumers by representing on its website and in television advertising that it would quickly and easily help them find the cheapest rates for a given hotel.

It also found the European company deceived consumers until at least July 2, 2018, into believing it provided an impartial, objective and transparent price comparison for hotel room rates.

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Trivgo aggregates deals offered by online hotel booking sites and highlights one offer as what is known as the top position offer.

The case brought by the Australian Competition and Consumer Commission revealed that Trivago used an algorithm that placed significant weight on which online hotel booking site paid it the highest cost-per-click fee in determining its website ranking.

That meant it often did not highlight the cheapest rates for consumers and the ACCC said Tivago’s own data showed that higher-priced hotel rooms were selected as the top position offer over lower-priced deals in 66.8 percent of all listings.

“Trivago’s hotel room rate rankings were based primarily on which online hotel booking sites were willing to pay Trivago the most,” ACCC chair Rod Sims said.

“By prominently displaying a hotel offer in ‘top position’ on its website, Trivago represented that the offer was either the cheapest available offer or had some other extra feature that made it the best offer when this was often not the case.”

 

triivago
An example of Trivago’s online price display from April 2018, shows a $299 deal highlighted when a cheaper deal was available if a consumer clicked “More deals”. Source: ACCC.

The Court also found Trivago’s hotel room rate comparisons that used strike-through prices or text in different colors gave consumers a false impression of savings.

This was because they often compared an offer for a standard room with an offer for a luxury room at the same hotel.

“We brought this case because we consider that Trivago’s conduct was particularly egregious,’’ Sims said.

“Many consumers may have been tricked by these price displays into thinking they were getting great discounts.

“In fact, Trivago wasn’t comparing apples with apples when it came to room type for these room rate comparisons.”

The ACCC has sought orders for penalties, declarations, injunctions and costs.

“This decision sends a strong message to comparison websites and search engines that if ranking or ordering of results is based or influenced by advertising, they should be upfront and clear with consumers about this so that consumers are not misled,” Sims said.