Tuesday, 21 January 2020 15:43

Trivago misled consumers, says Federal Court

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Hotel booking meta-comparison site Trivago breached the Australian Consumer Law by misleading consumers into it would help them find the cheapest rates available for a given hotel, the Federal Court has found.

Instead, Trivago's algorithm was biassed towards the booking site that paid the highest referral fee to the company. Furthermore, Trivago often did not highlight the cheapest available rate.

And that's not the end of it: the court also found that Trivago often gave a false impression of savings available as it compared an offer for a standard room with one for a (more expensive) luxury room at the same hotel.

"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."

He added "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."

According to the ACCC, Trivago's own data showed that higher-priced room rates were selected as the offer highlighted at the top of the results over alternative lower-priced offers in 66.8% of listings.

In the example below (taken on 1 April 2018), a cheaper deal was only displayed if the user clicked on "More deals" below the offers shown on the first page of results.

 Trivago ACCC example

The Federal Court found Trivago misled consumers at least between December 2016 and July 2018.

"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," said Sims.

The ACCC has sought orders for penalties, declarations, injunctions and costs, and a hearing on these matters will be held at a later date.

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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