Trivago misled travellers over hotel pricing in breach of consumer law, the Australian Federal Court has ruled, in a judgement likely to cause waves across the global accom community.
The German-based hotel comparison giant owned by Expedia was ruled to have engaged in misleading conduct and made false representations to consumers and now faces a multi-million-dollar penalty.
The Australian Competition and Consumer Commission argued Trivago promised customers “impartial and objective” accommodation price comparisons which would allow them to easily identify the cheapest offer available.
But instead the company promoted its best advertisers, the ACCC argued, in some cases comparing the price of standard and luxury rooms as it filtered cheapest prices out of its lists to prioritise clients.The consumer watchdog launched court action in August over website and television advertising which aired more than 400,000 times from late 2013 to mid-2018 in Australia.
The Australian Federal Court will schedule a hearing in coming months to determine the extent of Trivago’s penalties, with each of its many breaches expected to attract a fine of more than a million dollars.
AccomNews reported more than a year ago that our ACCC equivalent, the Commerce Commission, was watching with interest how court proceedings across the ditch unfolded. The commission has received 18 complaints about Trivago in five years.
The Travel Agents’ Association of New Zealand lodged a complaint with the commission about Trivago’s claims some three years ago, chief executive Andrew Olsen saying back in December 2018 he was disappointed at the commission’s failure to act over the alleged breaches.
“We’d like to think that now they will take the appropriate steps and measures with the investigation and conclude it in the timeliest manner,” he said.
This week, Justice Mark Moshinsky ruled Trivago contravened several sections of Australian consumer law, not only by falsely claiming it offered the cheapest prices, but by displaying red strike-through text that consumers were led to believe referred to discounted rates.
The Australian Federal Court will schedule a hearing in coming months to determine the penalties, with each breach likely to attract a fine of more than a million dollars.
Trivago’s main source of income is the cost-per-click fee it charges advertisers when a consumer clicks on an accommodation offer made through the comparison site. The fee is payable whether or not the consumer goes on to make a booking.
Chief executive of Australia’s Accommodation Association, Dean Long, said the verdict reinforced “the importance of guests booking directly with the accommodation provider to ensure they obtain the best deals available”.