Trivago fined over $44 million for misleading ‘cheapest hotel rates’ ads
Travel booking company Trivago has been fined $44.7 million for misleading consumers about its hotel room rates.
Trivago was found guilty in 2020 of telling consumers it would show them the cheapest rates, when it actually ranked hotels based on which advertisers paid the highest fee-per-click.
The company admitted that between late 2016 and mid-2019, it received around $58 million in cost-per-click charges for clicks on deals that weren’t the cheapest deal available for a given hotel. .
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Trivago’s unlawful conduct cost Australian users around $30 million and was intentional rather than accidental, Federal Court Judge Mark Moshinsky said in a judgment on Friday.
“Trivago’s breaches have caused loss or damage to Australian consumers in the order of $30 million, and no redress has occurred,” he said.
This called for a substantial sanction, he concluded.
While the penalty was multiple multiples of Trivago’s profit, the $44.7 million fine was necessary for specific and general deterrence, he added.
Trivago’s lawyers had previously argued that a $15 million fine would be an adequate penalty, while the ACCC wanted the travel company fined $90 million.
“A full penalty of the order proposed by Trivago would not reflect the seriousness of the violations and would be considered an ‘acceptable cost of doing business,'” Judge Moshinsky said.
Tim Begbie QC, representing the consumer watchdog, told the court in October last year that Trivago’s conduct was serious and far-reaching.
Weighting search results by what Trivago was paid was central to its business model and it was providing a service it was not providing, he argued.
“What Trivago delivered to consumers was almost the opposite of what it promised,” Begbie said.
There were 213 million searches for hotel rooms on the Trivago site over a period of about 13 months, less than half the time the company misled people, the court heard .
Trivago changed its website following the court’s initial ruling, a company spokesperson said.
“While we are disappointed with today’s outcome, we look forward to putting this behind us and continuing to help millions of Australians find great accommodation deals,” the spokesperson told the PAA.
ACCC President Gina Cass-Gottlieb said online companies should be held accountable, noting that Trivago had often compared the price of a standard room with a deluxe room at the same hotel.
“Consumers were misled into thinking they were getting a great hotel deal when they weren’t,” she said in a statement.
“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 Trivago’s conduct.
“This penalty sends a strong message not only to Trivago, but also to other comparison sites, that they should not mislead consumers when making recommendations.”