Trivago to pay a $44.7 million fine for misleading hotel room rates

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Online travel portal Trivago, known for offering the lowest hotel room rates, has been reportedly fined $44.7 million for misleading consumers about the hotel rates.

In 2020, the company was found guilty of telling its customers that it showed them the cheapest rates but was actually ranking hotels based on which advertisers were paying more per-click fees. These misleading claims were featured in advertising as well as on Trivago's website over 400,000 times between late 2013 and mid-2018.

In an Australian federal court judgment last week, Justice Mark Moshinsky stated that Trivago’s contravening conduct, which was intentional and not accidental, had cost users across the country $30 million. He further said that there was no evidence of the travel company paying compensation or making any form of reparation to the affected users, for which he believed a substantial penalty should be paid.

Justice Moshinsky added that even though the penalty is higher than the profit Trivago made from its conduct, a $44.7 million fine is necessary for general and specific deterrence. He added that the penalty order proposed by Trivago was not reflecting the seriousness of its contraventions but instead seemed like an acceptable price for doing business.

Trivago’s lawyers had earlier argued that a $15 million fine would be a sufficient penalty, while on the other hand, the Australian Competition and Consumer Commission (ACCC) expected a 90 million fine.

Tim Begbie QC, who represented ACCC, had told the court in October 2021 that the travel company’s conduct was serious and far-reaching. He also argued that the weighting of search results as per what Trivago earned was at the center of its business model while offering a service it did not provide.

For around 13 months, there had been 213 million searches for hotel rooms on Trivago, which the court was told was less than half of the total period during which the company was misleading people.

A company spokesman stated that the travel company changed its website after the court’s initial judgment.

Source credit: https://www.theguardian.com/australia-news/2022/apr/22/trivago-fined-45m-for-misleading-consumers-about-hotel-room-rates