Friday, 22 April 2022 11:49

Trivago fined $44.7 million for misleading consumers

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Trivago fined $44.7 million for misleading consumers ACCC

Hotel aggregation site Trivago has been ordered to pay penalties of $44.7 million by the Federal Court.

In 2020 Trivago was found to have breached the Australian Consumer Law, and later that year it lost an appeal against the decision.

The Federal Court found that Trivago had breached the Australian Consumer Law by misleading consumers when representing that its website would quickly and easily help users identify the best deal or cheapest rates available for a given hotel, whereas Trivago's algorithm in fact placed significant weight on the per-click fee that would be paid to the company.

Consequently, around two-thirds of the time the highlighted offer was not the cheapest rate, so consumers collectively overpaid approximately $38 million while Trivago collected approximately $58 million in fees for the offers that were not the cheapest for a given hotel.

"One of the ACCC's key priorities is to hold online businesses accountable for their representations to consumers and to ensure consumers are fully aware of the way these supposedly free services actually work and what influences the prices they display," said ACCC chair Gina Cass-Gottlieb.

"The way Trivago displayed its recommendations when consumers were searching for a hotel room, meant consumers were misled into thinking they were getting a great hotel deal when that was not the case."

"Trivago also mislead consumers by using strike-through prices which gave them the false impression that Trivago's rates represented a saving when in fact they often compared a standard room with a luxury room at the same hotel," she added.

"Trivago's conduct took advantage of 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."

"This penalty sends a strong message not just to Trivago, but to other comparison websites, that they must not mislead consumers when making recommendations," added Cass-Gottlieb.

But if breaking the Australian Consumer Law results in $58 million revenue and a $44.7 million fine, just how strong is that message really?

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Stephen Withers

Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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