The Federal Court has found that Trivago breached the Australian Consumer Law after misleading consumers about hotel room rates on both its website and television advertisements.
According to the Australian Competition Commission (ACCC), the court ruled that from at least December 2016, Trivago has been using an algorithm to place "significant weight" on hotel booking sites that paid Trivago the highest cost-per-click fee, and therefore did not often present the cheapest rates to consumers.
"Trivago's hotel room rate rankings were based primarily on which online hotel booking sites were willing to pay Trivago the most," ACCC chair Rod Sims said.
"By prominently displaying a hotel offer in 'top position' on its website, Trivago represented that the offer was either the cheapest available offer or had some other extra feature that made it the best offer when this was often not the case."
The court also found Trivago's hotel room rate comparisons that used strike-through prices or highlighted text in different colours gave consumers a false impression that they were making savings because, in reality, Trivago was comparing an offer for a standard room with an offer for a luxury room at the same hotel.
The consumer watchdog kicked off court proceedings in the Federal Court against Trivago in August 2018.
"We brought this case because we consider that Trivago's conduct was particularly egregious," Sims said.
"Many consumers may have been tricked by these price displays into thinking they were getting great discounts. In fact, Trivago wasn't comparing apples with apples when it came to room type for these room rate comparisons."
At the time, Trivago told ZDNet that it would defend the action taken by the ACCC.
"Trivago helps thousands of Australians find their ideal accommodation through personalised searches and a deep supply of hotel prices and other information. Our priority is to enable Australian travellers to find their ideal hotel," a spokesperson said.
"We agree with the ACCC's earlier public statement that 'comparator websites can assist consumers to make more informed purchasing decisions when comparing what are often quite complex products, and can promote healthy competition by assisting small or new service providers to compete more effectively'.
"We are disappointed by the action the ACCC has chosen to take in relation to Trivago and will vigorously defend our interests."
The case will return to federal court at a later date to determine the penalties that Trivago will receive. The court hearing has yet to be scheduled.
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