The Australian Competition and Consumer Commission (ACCC) is taking action against online hotel comparison site Trivago, alleging it misled customers by giving the impression they were getting the cheapest deal for a room.
The ACCC says Trivago’s TV advertising and website, “from at least December 2013”, breached Australian Consumer Law by presenting the site as an impartial and objective price comparison service.
However, room prices were actually prioritised according to advertisers who were willing to “pay the highest cost per click fee to Trivago”, the regulator claims.
An investigation by the commission suggests users “overwhelmingly” clicked on the prominently displayed prices, even though they may not have been the best deal.
“We allege that because of the design of Trivago’s website and representations made, consumers were denied a genuine choice about choosing a hotel deal, by making choices based on this misleading impression created by the Trivago website,” ACCC chair Rod Sims said in a statement.
He also claims the online strike-through comparisons were false or misleading since they often compared an offer for a standard room against a luxury room at the same hotel to create the impression of greater savings for the standard option.
“We also allege that by not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel. Further, hotels may have lost potential business as a result of this alleged conduct.
“This case highlights growing concerns the ACCC has in relation to comparison platforms, and on how algorithms present search results to consumers,” Sims said.
“We are very concerned that such platforms convey an impression that their services are designed to benefit consumers, when in fact listings are based on which supplier pays the most to the platform.”
Sims added that businesses risk breaching consumer laws if they don’t make sure it’s clear to consumers whether search results are paid for or sponsored.
Trivago has stopped airing television ads that make representations about price since April this year.