Hotel aggregation and comparison site Trivago has been found guilty of duping customers into paying more with dodgy TV ads and price comparisons.
The Federal Court has found Trivago breached the Australian Consumer Law when it made misleading representations about hotel room rates both on its website and television advertising.
The court ruled that, as far back as December 2016, Trivago misled consumers by duping them into believing that its website would quickly and easily help users identify the cheapest rates available for a given hotel.
In fact, according to the Australian Competition and Consumer Commission (ACCC), Trivago used an algorithm to rank websites based on which online hotel booking site paid Trivago the highest cost-per-click fee and made it look like as if it were the beast deal available.
“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.”
The court also found Trivago’s hotel room rate comparisons that used strike-through prices or text in different colours gave consumers a false impression of savings 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. 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,” Mr Sims said.
Trivago has also been held accountable for misleading consumers to believe that its website provided an impartial, objective and transparent price comparison for hotel room rates until at least 2 July 2018.
Strong message for comparison sites
Mr Sims underlined that it is not just Trivago in the firing line for misleading consumers.
“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,” Mr Sims said.
A hearing on relief, including penalties, will be held at a later date.
Maja Garaca Djurdjevic is the editor of My Business.
Maja has an extensive career as a journalist across finance, business and market intelligence. Prior to joining Momentum Media, Maja spent several years unravelling social, political and economic intricacies in Eastern Europe.