Start-ups and budding entrepreneurs trying to stretch their scarce dollars as far as possible will have second thoughts about using the once popular Trivago hotel comparison website following an Australian Hight Court ruling.
The Court found that Trivago had breached Australian consumer protection laws on a massive scale for many years.
The company had engaged in misleading conduct and falsely representing its advertising to consumers on its website and on television marketing.
The Australian Competition and Consumer Commission (ACCC) told the Federal Court that Trivago had promised impartial, objective and transparent hotel price comparisons giving clients an opportunity to identify the cheapest option available.
Instead trivago had promoted its biggest advertisers as the best available option.
The company highlighted one price out of all of its advertisers, giving the false impression that it was the best available when it was not.
The ACCC said misleading information on Trivago’s website and on television advertising has been promoted more than 400,000 times between late 2013 and mid 2018.
Justice Mark Moshinsky ruled that Trivago broke several consumer protection laws by advertising that it offered the best or cheapest prices when ranking hotels. In reality the hotel rankings were based on how much they paid in advertising.
The Court found that Trivago’s contractual terms required hotels to pay Trivago a fee if consumers clicked on the offer, irrespective of whether they accepted the deal or not.
ACCC chair Rod Sims described Trivago’s conduct as “particularly egregious.” He said the Federal Court ruling sent a strong message to comparison sites and search engines that consumers have to be told if a ranking is influenced by advertising.