Hotel booking company Trivago fines nearly $49 million for ‘deceptive’ conduct
Trivago has been found guilty of misleading and deceptive conduct by the Australian Federal Court. Video / Trivago
Hotel booking company Trivago has been fined A$44.7 million ($48.9 million) in Australia for its ‘highly misleading’ conduct over adverts claiming it would find customers the cheapest price for hotel rooms.
Trivago was found guilty by the Federal Court in 2020 of breaching Australian consumer law after a case was brought against it by the Australian Competition and Consumer Commission.
One of the main factors in ranking the company’s hotel room rates was which online booking sites paid the highest cost-per-click (CPC) fees.
Trivago’s revenue came primarily from these CPC fees.
It was discovered that the most expensive room rates were selected as the best position offer compared to other cheaper offers in 66.8% of the ads, which shows its influence on users.
In his ruling on Friday, Judge Mark Moshinsky said Trivago’s conduct was “highly misleading” to consumers.
“The television advertisement conducted by Trivago at the start of the relevant period was very misleading,” he said.
“The advertisement stated that the Trivago website would quickly and easily identify the cheapest available rates for a hotel room that matched a consumer’s search, but in fact the website did not.
“Furthermore, Trivago stated that higher position offers were the cheapest offers available for an identified hotel, or had some other characteristic that made them more attractive than any other offer for that hotel. This too was highly misleading.”
Judge Moshinsky estimated that Trivago’s misleading advertising cost consumers A$30 million because they chose more expensive hotels over cheaper ones.
“The position is that Trivago’s breaches have caused loss or damage to Australian consumers in the order of A$30 million, and no remedy has taken place. In my view, this calls for a substantial penalty”, did he declare.
Regarding the A$44.7 million fine imposed, Judge Moshinsky noted that there was “a considerable divide between the parties” over what the sentence should be.
The ACCC had advocated a fine of at least A$90 million, while Trivago said it should be A$15 million.
Judge Moshinsky said the A$44.7 million fine came after “extremely serious” breaches of Australian consumer law and noted that the penalty proposed by Trivago was only half “of the losses and estimated damages suffered by consumers”.
ACCC President Gina Cass-Gottlieb said the fine reflected the “seriousness” of Trivago’s conduct.
“The way Trivago displayed its recommendations when consumers searched for a hotel room meant that consumers were misled into thinking they were getting a good deal when they weren’t,” Cass-Gottlieb said. .
“Trivago also misled consumers by using strikethrough prices that gave them the false impression that Trivago’s rates represented a savings when in fact they were often comparing a standard room with a deluxe room in the same hotel.
“This sanction sends a strong message not only to Trivago, but also to other comparison sites, that they should not mislead consumers when making recommendations.”
In a press release, Trivago said it was “disappointed with the result”.
“Following the initial judgment which offered new guidance on how comparison website results should display recommendations in Australia, Trivago has worked quickly to modify its website to comply with the court ruling,” said the society.
“While we are disappointed with today’s result, we look forward to putting this behind us and continuing to help millions of Australians find great accommodation deals.”
Trivago was also ordered to pay the ACCC’s legal costs.