The full Federal Court has dismissed an appeal from Trivago today, upholding its decision that the hotel comparison site misled consumers about hotel prices in its online and offline advertisements, and failed to disclose the use of an algorithm that favoured Trivago’s bigger spending clients.
The matter will now return to the primary judge to consider orders sought by the applicant, the ACCC, for declarations, injunctions, penalties and costs.
In January, the court ruled Trivago had made representations to consumers that its top ranking result would offer consumers the best available deal based on their search criteria.
However, according to the judgement, the german based company used a ranking algorithm that favoured the results of accommodation providers that were paying Trivago higher fees and not necessarily the best deal, which the company failed to properly disclose.
Trivago’s primary revenue source comes from accommodation providers paying it a “cost per click” when Trivago users click through to make a booking.
Experts assisting the Court found higher priced hotel offers were selected as the top position offer over alternative lower priced offers in 66.8 per cent of listings due to higher CPC more than any other factor.
The price difference between the “top offer” and the actual cheapest option was typically less than 10 per cent, but in 12 per cent of cases was more than 10 per cent.
- A sample of Trivago’s results in 2017. Source: ACCC
The court also ruled Trivago was misleading consumers with the use of “strikethrough prices” and text colour when comparing standard room’s prices to luxury room prices.
The Australian Competition and Consumer Commission instituted proceedings against Trivago in 2018, claiming victory in January this year.
Today the regulator said the decision by the full Federal Court upholds the earlier decision that Trivago had misled consumers.
“This is a win for consumers and is an important warning to comparison sites that they must not mislead consumers about the results they recommend,” ACCC Chair Rod Sims said.
“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.
“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 a cheaper prices.”
Trivago has been contacted for comment.