MELBOURNE, AAP – Travel booking company Trivago has been fined $44.7 million for misleading consumers about its hotel room rates.
Trivago was found guilty in 2020 for telling consumers it would show them the cheapest rates, when it actually ranked hotels by factoring in which advertisers paid the highest per-click fee.
The company admitted that between late 2016 and mid-2019 it received about $58 million in cost-per-click fees from clicks on offers that were not the cheapest available offer for a given hotel.
Trivago’s contravening conduct cost Australian users about $30 million and was intentional, rather than accidental, Federal Court Justice Mark Moshinsky said in a judgment on Friday.
“Trivago’s contraventions have caused loss or damage to Australian consumers in the order of $30 million, and no remediation has occurred,” he said.
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That called for a substantial penalty, he found.
While the penalty was many multiples of Trivago’s profit from the conduct, the $44.7 million fine was necessary for specific and general deterrence, he added.
Lawyers for Trivago had previously argued a fine of $15 million would be an adequate penalty, while the ACCC wanted the travel company fined $90 million.
“A total penalty of the order proposed by Trivago would not reflect the seriousness of the contraventions and would be seen as an ‘acceptable cost of doing business’,” Justice Moshinsky said.
Tim Begbie QC, representing the consumer watchdog, told the court in October last year that Trivago’s conduct was serious and far reaching.
Weighting search results according to what Trivago got paid was at the heart of its business model and it offered a service it did not provide, he argued.
“What Trivago delivered to consumers was almost the opposite of what it promised,” Mr Begbie said.
There were 213 million searches for hotel rooms on the Trivago site over a period of about 13 months, which was less than half of the period the company had misled people, the court was told.
Trivago changed its website following the court’s initial judgment, a company spokesman said.
“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,” the spokesman told AAP.
ACCC chair Gina Cass-Gottlieb said online businesses had to be held accountable, noting that Trivago had often compared the price of a standard room with a luxury one in the same hotel.
“Consumers were misled into thinking they were getting a great hotel deal when that was not the case,” she said in a statement.
“Trivago’s conduct took advantage of consumers’ desire to find the best deal and the court’s decision to order such a significant penalty reflects the seriousness of Trivago’s conduct.
“This penalty sends a strong message not just to Trivago, but to other comparison websites, that they must not mislead consumers when making recommendations.”