Trivago fined $45 million for misleading consumers about hotel rates
Trivago was fined $44.7 million by the Federal Court for making misleading claims about hotel room rates on its website and in television advertising.
In January 2020, the Federal Court found that Trivago breached Australian consumer law by misleading consumers into believing that its website would help them find the best deal or cheapest rates for a given hotel. .
According to consumer watchdog the ACCC, Trivago used an algorithm that favored online hotel booking sites that paid Trivago the highest cost-per-click fees and therefore did not highlight cheapest prices for consumers.
“One of the ACCC’s top priorities is to hold online companies accountable for their representations to consumers and to ensure that consumers are fully aware of how these supposedly free services actually work and which influences the prices they display,” ACCC President Gina Cass-Gottlieb said. .
“The way Trivago displayed its recommendations when consumers searched for a hotel room, meant consumers were being misled into thinking they were getting a great hotel deal when they weren’t.”
Trivago admitted that between December 2016 and September 2019, it received around $58 million in cost-per-click fees from clicks on deals that weren’t the cheapest available for a given hotel. As a result, consumers overpaid hotel booking sites by approximately $38 million for the rooms featured in these deals.
“Trivago also misled consumers by using crossed-out 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,” he said. said Cass-Gottlieb.
“Trivago’s conduct benefited from consumers’ desire to find the best deal, and the court’s decision to order such a significant penalty reflects the seriousness of Trviago’s conduct.”
The Accommodation Association said the decision highlights the value for Australian consumers of booking accommodation directly or through Australian travel companies.
“On behalf of our members, the Accommodation Association welcomes today’s common sense Federal Court ruling on Trivago, however, for Australian hotels and motels, the writing has been on the wall for some time,” said Accommodation Association CEO Richard Munro.
“After surviving COVID-19 and border closures, the harsh reality is that many of our members rely on a portion of their bookings generated through these platforms and may find themselves stuck between a rock and a hard place.”
Munro said the Association continually alerts the ACCC to exploitative practices and wants the ACCC to expand its network.
“[We want the ACCC] to review price parity rules when similar large overseas-based multinational companies threaten to shut out Australian hosting providers if the hosting provider offers a better rate online,” Munro said.
“Australian travel consumers deserve access to the best rates available, and the only way to guarantee that outcome is to book directly with Australian accommodation operators or through your local travel agent.”