Trivago loses court appeal for breaching Australian consumer law

Hotel price comparisons website appeal is rejected and initial judgment upheld for misleading consumers

Trivago has lost an appeal through the Australian Federal Court against an earlier decision finding it guilty of misleading consumers on hotel room rates on its website and via TV advertising.

Following action taken by the Australian Competition and Consumer Commission (ACCC), the hotel comparison website was found by the courts to have breached Australian Consumer Law for nearly three years by favouring those that paid the higher cost-per-click to advertise on its website.

The judgment made in the Federal Court of Victoria on 20 January 2020 found Trivago guilty of misleading consumers since at least December 2016 by representing its site as helping consumers quickly and easily identify the cheapest rates available for a given holiday. Instead, its site algorithms placed significant weight on which online booking site paid Trivago the most to advertiser.

The initial judgment stated Trivago did not sufficiently disclose to users that this algorithm existed, and had also misled consumers by using strike through prices and text compare the rate of a standard room with the rate for a luxury room at the same hotel.

Trivago appealed the decision in March. However, in a judgement made on 4 November, the Federal Court upheld the initial decision. ACCC chair, Rod Sims, said this was a win for consumers and important warning for all comparison sites to not mislead the public about results they recommend.

“We brought this case because we were concerned consumers were being misled by Trivago’s claims that its site was getting the best deal for consumers, when in fact they were shown the deals that benefitted Trivago,” he stated.

The matter now returns to the primary judge to consider orders sought by the ACCC at a later date for declarations, injunctions, penalties and costs.

The ACCC initially commenced proceeding against Trivago in August 2018, alleging the website had been misleading consumers on providing an impartial and objective price comparison service helping consumers find the best deals available on hotel room bookings from other site since December 2013.

In its submission, the consumer watchdog cited more than 400,000 instances where Trivago’s advertisements had aired using these misleading representations about price. For example, during proceedings, experts for each side disputed whether Trivago’s algorithms favoured ‘best price’ or ‘cost per click’ as the driving criteria for displaying hotel offers, and the impact of ‘win/loss’ analysis, bidding prices and other inputs to rate the success of deals. The result was Trivago’s own data showed higher-priced room rates were selected as the top position offer over alternative lower priced offers in 66.8 per cent of listings.

In addition, the ACCC alleged online strike-through comparisons were either false or misleading and may have resulted in anti-competitive behaviour. The ACCC said its investigations and data showed the majority of consumers visiting Trivago’s website clicked on the most prominently displayed offers for each hotel.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.

 

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

More Videos

fdgfd www.google.com

Caroline Natalia

How WW shifted physical engagement to virtual success in 5 days

Read more

I found decent information in your article. I am impressed with how nicely you described this subject, It is a gainful article for us. Th...

Daniel Hughes

What 1800 Flowers is doing to create a consistent customer communications experience

Read more

Extremely informative. One should definitely go through the blog in order to know different aspects of the Retail Business and retail Tec...

Sheetal Kamble

SAP retail chief: Why more retailers need to harness data differently

Read more

It's actually a nice and helpful piece of info. I am satisfied that you shared this helpful information with us. Please stay us informed ...

FIO Homes

How a brand facelift and content strategy turned real estate software, Rockend, around

Read more

I find this very strange. The Coles store i shop in still has Flouro lights? T though this would have been the 1st thing they would have ...

Brad

Coles launches new sustainability initiative

Read more

Blog Posts

9 lessons from 7 months of relentless failure

The most innovative organisations embrace failure. Why? Because it is often through failing the most creative out-of-box thinking happens. And with it comes vital learning opportunities that bring new knowledge and experience into teams.

Jacki James

Digital product lead, Starlight Children's Foundation

Why conflict can be good for your brand

Conflict is essentially a clash. When between two people, it’s just about always a clash of views or opinions. And when it comes to this type of conflict, more than the misaligned views themselves, what we typically hate the most is our physiological response.

Kathy Benson

Chief client officer, Ipsos

Brand storytelling lessons from Singapore’s iconic Fullerton hotel

In early 2020, I had the pleasure of staying at the newly opened Fullerton Hotel in Sydney. It was on this trip I first became aware of the Fullerton’s commitment to brand storytelling.

Gabrielle Dolan

Business storytelling leader

Sign in