What you need to know
- The Full Federal Court has upheld the first instance decision in this matter and found that Trivago did not sufficiently disclose to consumers that its website used an algorithm which prioritises accommodation providers which were paying a higher fee to Trivago.
- The Court also upheld the finding that Trivago mislead consumers through the use of strike through prices when comparing the rate for a standard room with the rate for a luxury room at the same hotel.
What you need to do
- Businesses should ensure that any representation made in relation to their advertising is truthful, accurately described and provides clear disclaimers for any relevant further information, particularly if payments from partners influence ranking and prominence of offers. Including language such as 'Top Deal' or 'best offer' should be used with caution.
- It is also important whenever using comparative advertising, that the nature and scope of the comparison is clear to consumers.
The Full Federal Court has reaffirmed the January 2020 decision of the Federal Court which held that Trivago, an online platform comparing hotel prices, mislead consumers with respect to representations it made regarding hotel sale prices. The ACCC successfully argued that Trivago's conduct had breached sections 18 (misleading and deceptive conduct), 29 (1)(i) (misleading or false claims regarding pricing) and 34 (misleading the public as to the nature, characteristics, the suitability for the purpose of any service) of the Australian Consumer Law (ACL). We previously reported on this decision here.
On appeal, Trivago argued unsuccessfully that the primary judge had erred in finding that Trivago had represented that the top position offer was the cheapest option when considered in light of the surrounding contextual factors. These factors included pop ups which appeared when a user of the website hovered its mouse over an information button. The information which was shown included the statement "in determining the price to display…we consider…the level of compensation provided by the booking site we offer".
In addition there was a Learn How Trivago Works page on the website which stated that "we take into account the compensation booking sites provide us with when a user clicks on an offer… you may find offers under the 'more deals from' slide out section with a lower price than the 'top position offer".
The Full Federal Court rejected these arguments and held that these contextual elements were "opaque and insufficient". The Full Court accepted the primary judge's finding on the expert evidence which said that consumers will accept the first choice they see which meets their needs if faced with multiple options. Further, the hover element was only exposed to those users who happened to stumble across it.
The ACCC will now be seeking orders from the primary judge to consider the penalties.
The outcome of the decision is a warning to comparison sites, aggregators and online marketplaces which are under increasing scrutiny by the ACCC. When using "best price" or top position offers, these businesses should use caution and disclose any information used to determine the best offer.
Authors: Josephine Gardiner, Lawyer; and Lisa Ritson, Partner.
