Technology

Consumer watchdog takes Trivago to court over misleading hotel prices

The ACCC has taken Trivago to the Federal Court, alleging it made misleading hotel price representations in its TV ads and website.

The consumer watchdog alleges the hotel comparison site ran TV ads presenting itself as an impartial price comparison service to help travellers identify the cheapest price when in reality, the website prioritised advertisers willing to pay the highest cost per click fee to Trivago.

Trivago’s website aggregates deals offered by online travel sites (like Expedia, Hotels.com and Amoma) and hotel proprietors for available rooms at a hotel and then highlights one price out of all their advertisers, which the ACCC alleges created an impression it is the best deal.

However, in many cases the highlighted price was not the cheapest available at that hotel.

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“Based on Trivago’s highlighted price display on its website, we allege that consumers may have formed the incorrect impression that Trivago’s highlighted deals were the best price they could get at a particular hotel, when that was not the case,” ACCC Chair Rod Sims said.

“Trivago based its rankings on the highest cost per click it would receive from its advertisers.

“We allege that because of the design of Trivago’s website and representations made, consumers were denied a genuine choice about choosing a hotel deal, by making choices based on this misleading impression created by the Trivago website.”

The ACCC also alleges that Trivago’s online strike-through price comparisons were false or misleading because they often compared an offer for a standard room with an offer for a luxury room at the same hotel, creating a false impression of savings offered for the standard room.

“We also allege that by not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel,” Sims said.

“Further, hotels may have lost potential business as a result of this alleged conduct.”

The ACCC investigation uncovered data that shows consumers who visited Trivago’s website overwhelmingly clicked on the most prominently displayed offers for each hotel.

“This case highlights growing concerns the ACCC has in relation to comparison platforms, and on how algorithms present search results to consumers,” Sims said.

“We are very concerned that such platforms convey an impression that their services are designed to benefit consumers, when in fact listings are based on which supplier pays the most to the platform”

“Businesses must ensure the nature of search results, such as if they are sponsored or paid for, is made clear to consumers or they risk contravening the Australian Consumer Law.”

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