Insights / March 5th, 2020

Not such a bargain? Trivago’s Misleading and Deceptive Advertising

In January the Federal Court held that Trivago’s website had breached the Australian Consumer Law’s prohibition on misleading and deceptive advertising. This serves as a strong reminder to all companies to ensure that advertising is accurate and transparent, leaving no room for any misrepresentations of fact or false impressions.

The Trivago Case

For those unfamiliar with Trivago, the comparison website offers an online hotel booking aggregator which compares the different prices from hotel booking sites. In 2018, the Australian Competition and Consumer Commission (ACCC) commenced an action against Trivago alleging that many design aspects of Trivago’s website, and the prices that were displayed, led consumers into false belief that they were receiving the best price or deal for a hotel. Specifically, the ACCC argued that often the leading or most prominent price was not the cheapest available.

Amongst other things, the Court found that:

  • The use of strikethrough pricing (striking through a comparative price and highlighting a new or reduced price) and other comparative pricing techniques, misrepresented potential savings available to customers. This was done by comparing prices for different rooms and services rather than the same offerings between different booking sites;
  • ‘Top position offers’ were not always the best prices available; and
  • Other features of the website falsely created the impression that consumers were saving money or receiving the best available deal for a particular hotel.

In concluding that the conduct was misleading and deceptive, Justice Moshinsky did not only have regard to the content presented, but the design of the website. Justice Moshinsky noted that the website’s design elements, including colour and relative size of content, can create an impression that consumers were saving money or selecting the best available deal, while - in fact - they were not.

In addition, qualifications and disclaimers advising consumers of the nature of the comparative pricing statements and other elements on the Trivago website, were not sufficiently clear or transparent. As such, despite being present, these disclaimers did not mitigate the potential for Trivago’s practices to be misleading.

Three Key Takeaways

Trivago’s case reminds all Australian businesses that advertisements and marketing promotions need to be designed with care. In particular:

  1. Advertisements must be factually accurate and any representations must be supported by verified facts. It is crucial that advertisements do not create false impressions or lead a consumer to believe in circumstances that are neither true nor accurate;
  2. When utilising comparative advertising practices, companies must take care to ensure that their advertisements are genuinely available to all consumers; and
  3. Qualifications and disclaimers must be clear, transparent and readily understood by consumers to be effective.

If you would like advice on ensuring your business’ advertising practices are compatible with the Australian Consumer Law’s misleading and deceptive conduct, or would like further information on how to ensure that your marketing is legally compliant, Contact Us and we can have a consumer law specialist assist you.