Trivago misled consumers 66.8% of the time by favouring highest-paying advertisers, court rules

Hotel comparison website Trivago broke the law by misleading consumers in TV and website advertising, the Federal Court has ruled.

From at least December 2016, the Netherlands-incorporated platform claimed it identified the cheapest available hotel rates. Instead, it used an algorithm which often did not highlight the cheapest rates, but instead favourably ranked hotels that paid the platform the highest cost-per-click fee.

As a result, the consumer watchdog, the Australian Competition and Consumer Commission (ACCC), took the website to court for breaching the Australian Consumer Law, resulting in the notable victory.

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

“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.”

The platform aggregates offers from other hotel booking sites like Expedia, and and hotel websites, and highlights one offer called the ‘top position offer’. Yet the company’s own data revealed that 66.8% of the time, the top position offer was not actually the cheapest.

An example of the misleading TV ads, claiming Trivago identified hotel rooms at the ‘best price’

The comparisons also used strike-through prices or text in different colours, which gave the false impression of savings. Instead of actually representing a discount, this formatting often compared the price of a standard room with that of a luxury room at the same hotel.

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

“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 court agreed that until at least 2 July 2018, Trivago misled consumers to believe that the website was an impartial, objective and transparent price comparison source.

This isn’t the first time the watchdog has been successful in a court case against Trivago. In 2018, the ACCC took the company to court for a very similar reason. Ultimately, Trivago admitted to misleading consumers in the 2017 advertising.

Sims said that this latest decision is a strong warning to similar companies.

“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,” he said.

A further hearing will be held to determine the fine Trivago will have to pay, and whether it has to pay the ACCC’s legal costs.


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