Hotel aggregation and comparison site Trivago has been referred to the Federal Court to face allegations that dodgy TV ads and price comparisons duped customers into paying more than they needed to.
The Australian Competition and Consumer Commission (ACCC) is alleging that Trivago’s television ads presented the company as offering impartial and objective price comparisons, but that in reality, its advertisers were prioritised by the size of the listing fee paid by the hotel.
This meant that while one deal was highlighted and made to look as if it were the best deal available, in many cases this was not actually the cheapest price available at that hotel, the ACCC said.
“Based on Trivago’s highlighted price display on its website, we allege that consumers may have formed the incorrect impression that Trivago’s highlighted deals were the best price they could get at a particular hotel, when that was not the case. Trivago based its rankings on the highest cost per click it would receive from its advertisers,” said ACCC chair Rod Sims.
“We allege that because of the design of Trivago’s website and representations made, consumers were denied a genuine choice about choosing a hotel deal, by making choices based on this misleading impression created by the Trivago website.”
Another allegation levelled against Trivago is that it duped customers by using inaccurate price comparisons, that pitted a standard room against a luxury room at the same hotel to inflate the apparent price savings.
“We also allege that by not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel. Further, hotels may have lost potential business as a result of this alleged conduct,” Mr Sims said.
According to the ACCC, these type of TV ads from Trivago were aired more than 400,000 times since their launch in December 2013, which ran until April 2018.
Comparison sites under close scrutiny
Mr Sims suggested it is not just Trivago in the firing line for misleading consumers.
“This case highlights growing concerns the ACCC has in relation to comparison platforms, and on how algorithms present search results to consumers,” he said.
“We are very concerned that such platforms convey an impression that their services are designed to benefit consumers, when in fact listings are based on which supplier pays the most to the platform.
“Businesses must ensure the nature of search results, such as if they are sponsored or paid for, is made clear to consumers or they risk contravening the Australian Consumer Law.”
Update - 27 August, 2018
Trivago subsequently responded to My Business' request for comment, claiming it plans to “vigorously defend” the legal action.
“We agree with the ACCC's earlier public statement that 'comparator websites can assist consumers to make more informed purchasing decisions when comparing what are often quite complex products, and can promote healthy competition by assisting small or new service providers to compete more effectively',” it said in a statement.
“We are disappointed by the action the ACCC has chosen to take in relation to trivago and will vigorously defend our interests.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.