Trivago fined $44.7m by Federal Court for misleading consumers

Federal Court fines the hotel room aggregation site for breaching Australian Consumer Law and prioritising higher-paying advertiser rooms over the cheapest options available

Accommodation comparison website, Trivago, has been ordered to pay penalties of $44.5 million by the Federal Court for misleading consumers two years after being found in breach of Australian consumer law.

The Australian Competition and Consumer Commission (ACCC) initially launched legal proceedings against Trivago in 2018, alleging the site’s hotel comparison service had been misleading consumers for nearly four years around advertising for what it claimed were the best rates on rooms. In fact, the highlighted prices were often not the cheapest, but instead those Trivago was prioritising for advertisers willing to pay the best cost-per-click rates for promotion. The promotion was achieved using an algorithm, which placed significant weight on online hotel booking sites that paid these higher feeds.  

In a judgment made in the Federal Court of Victoria on 20 January 2020, Trivago was found to have misled consumers since at least December 2016 by representing its website as helping to impartially identify the cheapest rates available for a given holiday globally.

Trivago appealed the ruling in March 2021, but the judgment was upheld in November 2021, paving the way for final $44.5 million penalty dished out by the Federal Court today. Trivago is part of the Expedia Group.

In a statement welcoming the Federal Court’s decision to order Trivago to pay the penalties, the ACCC noted Trivago had admitted that between December 2016 and September 2019, it received approximately $58 million in cost-per-click fees from clicks on offers that were not the cheapest available offer for a given hotel. This caused consumers to overpay hotel booking sites worth approximately $38 million for rooms featured in those offers.  Trivago’s own data showed that higher-priced room rates were selected as the Top Position Offer over alternative lower-priced offers in 66.8 per cent of listings, the ACCC stated.

“One of the ACCC’s key priorities is to hold online businesses accountable for their representations to consumers and to ensure consumers are fully aware of the way these supposedly free services actually work and what influences the prices they display,” ACCC chair, Gina Cass-Gottlieb, said. “The way Trivago displayed its recommendations when consumers were searching for a hotel room, meant consumers were misled into thinking they were getting a great hotel deal when that was not the case.

“Trivago also mislead consumers by using strike-through prices which gave them the false impression that Trivago’s rates represented a saving when in fact they often compared a standard room with a luxury room at the same hotel.”

The $44.5 million penalty reflects the seriousness of Trivago’s conduct, Cass-Gottlieb said. The figure includes multiple penalties for various breaches of Australian Consumer Law. Trivago was also ordered to pay all applicant’s costs of the proceedings.

“This penalty sends a strong message not just to Trivago, but to other comparison websites, that they must not mislead consumers when making recommendations,” Cass-Gottlieb added.  

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