Joshua Pianko

Joshua Pianko

Misleading Conduct? Trivago.

You will likely remember the catchy advertising campaign that was aired very regularly on Australian television over the past four or so years. ‘Hotel? Trivago’ should ring a bell. Trivago now finds itself in hot water with the ACCC for misleading consumers in its television advertising as well as on its website after the Full Federal Court has dismissed an appeal made by the hotel comparison website. 

Website and Television Advertising

Non-disclosure of financial incentive

Trivago purported to be a neutral comparison website allowing consumers to compare hotel deals from a range of websites. The judge in the Federal Court at first instance found that Trivago did not sufficiently disclose to users that its website used an algorithm that gave prominence to hotels paying Trivago a higher’ cost per click’ fee. ACCC chair Rod Sims explained that ‘If they’re making their money out of promoting the company that pays them the most money, consumers have got to know that.’

Other misleading conduct

The court also held that Trivago misled consumers through the use of strike-through prices and text in different colours. Trivago often compared the rate for a standard room at one Hotel with a luxury room at another hotel to give a false impression that the Hotel Trivago recommended was a better deal. This is despite Trivago’s TV commercials, which claimed that Trivago showed consumers all the different prices for ‘the exact same room.’ In the Federal Court in January, Justice Moshinsky said that ‘contrary to the impression created by the relevant conduct, the Trivago website did not provide an impartial, objective and transparent price comparison service.’

Key Takeaways

Disclose non-neutrality

Companies that purport to offer comparison services and present themselves as a neutral party must disclose to consumers if they have a financial incentive to recommend one good or service over another.

Comparisons must be accurate

When comparing prices, the prices compared cannot be for different products. This is particularly important when using strike through and different coloured wording to give the consumer the misguided impression that they are getting a better deal.

Consequences for breach

Businesses must learn that punishments can be severe from this example. The ACCC is seeking orders for declarations and injunctions from Trivago, as well as penalties and costs. The orders will be decided by Justice Moshinsky at a date to be determined.

If you want to protect your business from severe financial penalties, speak to someone from Midwinters Lawyers’ experienced Consumer Law team.

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