Trivago hit with 18 Commerce Commission complaints

The Commerce Commission says it has received 18 complaints about hotel comparison website Trivago.

Trivago, part-owned by US-based Expedia, has been found guilty of misleading and deceptive conduct by Australia's Federal Court for suggesting that top-listed prices on properties advertised on its site were the best.

But hotels were instead found to have been ranked based on commission.

"Trivago's hotel room rate rankings were based primarily on which online hotel booking sites were willing to pay Trivago the most," the Australian Competition and Consumer Commission chairman Rod Sims said.

The Commerce Commission has since confirmed to the Herald that the consumer watchdog had received 18 complaints about Trivago over a five-year period, starting from January 2015.

A Commerce Commission spokesperson said it had no current investigation into Trivago's practices in New Zealand, but noted the probe brought to court by its counterpart across the Tasman, the Australian Competition and Consumer Commission (ACCC).

It said it would continue its communication with the ACCC to ensure changes to the company's practices enforced there would be replicated in New Zealand.

The commission investigated Trivago's pricing in relation to "additional taxes and tariffs" in 2018 but decided not to take enforcement action, the spokesperson said.

"We have been in contact with the ACCC about their Trivago prosecution but our investigation was into different conduct to that investigated by the ACCC," the spokesperson said.

"We will continue to liaise with the ACCC on Trivago with the objective of ensuring that any changes made by Trivago to their practices as a result of the case are also made in New Zealand."

In the Australian court, Trivago was found to have not suggested the best prices on its website as it had claimed, and that the best prices were in fact filtered out of its list.

In some cases, it was found to have compared prices of standard and luxury rooms.

The court ruled that from December 2016, Trivago had misled consumers by representing that its website would quickly and easily identify the cheapest rates for a given hotel.

It found that the company used an algorithm which "placed significant weight on which online hotel booking site paid Trivago the highest cost-per-click fee in determining its website rankings", and often did not highlight the cheapest rates for consumers.

Trivago's revenue is mostly generated through cost-per-click payments.

The use of "strike-through prices" and text in different colours was also found to have given consumers a false impression of savings.

The Australian Federal Court will schedule a hearing in coming months to determine the penalties.

It is understood Trivago changed some tactics following the ACCC's initial probe.

Last year, New Zealand's Commerce Commission outlined online retailing as one of its main focus areas for the 2019/20 year.

In an interview with the Herald, Commerce Commission general manager of competition and consumer Antonia Horrocks said the watchdog was working to stamp out misleading "pressure tactics" used by retailers to rush purchases online.

Phrasing such as "Only five rooms left", "the offer finishes in 24 hours" with a countdown or "[insert name] from Auckland just bought," often used by comparison sites such as Expedia and Booking.com, would be vetted by the commission, Horrocks said last year.

Such comments were identified as pressure selling or "nudge" tactics, identified at the International Consumer Protection and Enforcement Network's "Internet Sweep Day" last year, where enforcement agencies from around the world reviewed websites at the same time to identify global sales tactics of concern.