Technology

Trivago loses appeal after misleading consumers over hotel ads

The Federal Court of Australia has dismissed an appeal by Trivago against an earlier decision which found the online travel company had breached Australian consumer law by making misleading representations about hotel room rates on its website and TV advertising.

In January 2020, the Federal Court ruled that Trivago had misled consumers by representing its website would quickly and easily help users identify the cheapest rates available for a given hotel.

The judge at first instance had found that Trivago did not sufficiently disclose to users that its website used an algorithm that gave prominence to accommodation providers paying the online travel company a higher payment fee (cost per click), meaning that the most prominent offers were often not the cheapest offers for consumers.

The primary judge also found that Trivago misled consumers through the use of strike-through prices and text in different colours because the company often compared the rate for a standard room with the rate for a luxury room at the same hotel.

Rod Sims, chair of the Australian Competition & Consumer Commission (ACCC), said the Federal Court’s dismissal of Trivago’s appeal is a win for consumers and an important warning to comparison sites not to mislead consumers about the results they recommend.

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

“Trivago’s conduct meant that consumers may have paid more for a room at a hotel than they should have, and hotels lost business from direct bookings despite offering cheaper prices.”

Tourism Accommodation Australia CEO Michael Johnson said the industry body had been working on behalf of its members for several years to reform booking websites like Trivago and had brought the matter to the attention of the ACCC.

“Many of our members had serious concerns about the misleading practices of some comparison websites, and the work by the ACCC to investigate and bring the matter to court is welcome,” he said.

“It is good news for our industry as we try to recover from the toughest year in recent memory.”

The matter will now return to the primary judge, who will consider the orders sought by the ACCC against Trivago at a later date. The consumer watchdog is seeking orders for declarations, injunctions, penalties and costs.

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