Trivago Hit With Massive Fine from Australian Federal Court Because of “Misleading” Conductby Daniel McCarthy /
Online hotel booking platform Trivago was fined $44.7 million AUS by Australia’s Federal Court on Monday for mispresenting cheap hotel rates.
According to the court’s decision, which can be read in full here, Trivago “engaged in conduct that was misleading or deceptive or likely to mislead or deceive” the public. Mainly, Trivago claimed that it makes it easy “to find the ideal hotel for the best price” in TV and digital advertisements while simultaneously positioning offers at the top of consumer search that were not the cheapest offer for the hotel room.
Instead, the court said, Trivago displayed offers made by those who were advertising with the company, and those who had paid more per click were rewarded with higher rankings on the search engine.
According to the court, “the experts at the trial on liability agreed that higher offers were selected as the Top Position Offer over alternative lower priced offers in 66.8% of listings.”
That practice lead not only to profit for Trivago—the court wrote that Trivago had collected $58 million AUS in profits from that model—but also lead its customers to overpay $38 million AUS.
In a statement in TMR, Trivago said it was "disappointed" with the outcome, but had already made changes recommended by the court.
"Following the initial judgment which offered new guidance about how results of comparator websites should display recommendations in Australia, trivago worked quickly to change its website so as to comply with the court’s decision. While we are disappointed with the outcome today, we look forward to putting this behind us and continuing to help millions of Australians find great accommodation deals," a spokesperson said.
Trivago’s fine is not the first high-profile fine for an online booking engine or OTA this year. New York-based OTA operator Fareportal, which runs CheapoAir and OneTravel, was fined $2.6 million by New York because of deceptive marketing practices. That OTA boasts that it is ranked in the top 5 online travel companies in the U.S. by revenue and in the top 3 online travel companies in the U.S. by monthly traffic.
New York Attorney General Letitia James said the fine, which was announced in March, was being levied because the company “used deeply deceptive tactics to trick millions of consumers into booking airline and hotel rooms,” with “dishonest and predatory behavior.”
Most notably, James and New York targeted “dark patterns” that Fareportal, and other OTAs, typically use to “trick consumers into buying goods or services.”