Business Law
Issue
Before the widespread fear of the virus majority of people used Trivago as a reliable website for booking and searching for favorable hotel rooms believing the site offered a good deal. If Trivago utilized the advertising title “cheap” or “at the best price,” does it translate to breach of Australian Consumer law?
Rule
Yes,
The Competition and Consumer Act 2010 provided on the Australian Consumer Law champions for honesty, accuracy, and fair dealing at any given time at the market place. Businesses need to ensure that any communication or promotional materials they make are genuine, or they are highly unlikely to mislead their target consumers at the time of advertisement.
Analysis
Misleading conduct or also known as deceptive conduct may be defined as the act of engaging in an activity that can mislead or deceive or is likely to deceive a consumer or other businesses. According to the Australian Consumer Law, it is illegal to engage in such acts. This law may be applicable whether the act was intentional or unintentional, or because of your conduct, one incurred any loss or damage.
Trivago is a website that was formed by a mass of fragmented deals that was provided by online hotel booking sites like Booking.com etc. For room availability. The website highlighted a single offer out of all hotel bookings offered by the booking sites and referred to it as the “Top Position Offer.” On the website, Trivago highlighted $299 while there was a cheaper deal if the consumers would have clicked for more deals. Through its management, Trivago NV had promised its consumers an “objective and transparent hotel price comparisons which would allow them to quickly and easily identify the cheapest offer available.” Rather than Trivago offering services that they promised, they instead promoted their best advertisers. The issue to be considered is whether Trivago NV used the room advertising “cheap” or at “at the best price,” breaching the Australian Consumer Law with misleading or deceptive conduct.
Firms and Individuals must obey the law, and for the code to work to its effectiveness, there must be a way to ensure people comply with it. The Australian Consumer Law applies to any business or an individual in Trade or Commerce (ACCC, 2018). Failure to abide by the set laws may lead to both civil and criminal liabilities. A person found guilty or been found to have breached a specific prohibition of the ACL may be liable to a fine up to $1.2 million for companies and $220000 for individuals. In this case, Trivago will have to pay $220000 to individuals. A civil penalty is, in most cases, a financial penalty, and it was designed to prevent the breaching of law. A court may only impose a sentence on a person who must be proved to have breached the ACL on the balance of probabilities. Misleading conducts or practices that are false may also give rise to criminal liabilities.
Criminal law deals with crime-related issues and the retribution of criminal offenses. In the case where the Australian Competition and Consumer Commission mentions criminal litigation to the Commonwealth Director of Public Prosecutions (CDPP), legal action may perhaps be taken in disfavor of a firm or an organization by the CDPP if suspected to have contravened a criminal proscription (ACCC, 2018). But before that, the matter will return to the Federal Court. A court may also provide other civil remedies such as court orders. In this case, Trivago NV will be required to sojourn the deception conduct that is breaching the decree, provide reimbursement to those who suffered loss or mutilation as a result of the contravening conduct. It may be required to inaugurate an acquiescence or teaching program for its employees to ensure the reduction of further contravention risks. Moreover, Trivago NV stood a chance of being disqualified, which would prohibit its management from managing the website for a specific period.
According to AccoNews Australia authored by Kate Jackson, the German-based hotel owed by Expedia, participated in gross misconduct of misleading its consumers by doctoring false representation in their website (Jackson, 2020). The main issue being misleading consumers by advertising and promising consumers; however, the advert had impartial objective making highlights that could help consumers easily identify cheap rooms that were offered at the best price. According to Justice Mark Moshinsky, who made a ruling against Trivago, he stated that the hotel violated several clauses and sections of the Australian Consumer Law. However, in the following manner, falsely advertising and claiming that it offered “best price,” permanently displaying a red strike-through text that acted as the misleading factor leading consumers to believe that some discounts were offered (Jackson, 2020).
The ACCC, in their ruling, described Trivago’s behavior as ‘particularly egregious.’ Fundamentally, such wording can only be interpreted that the act cannot, at any chance, be treated lightly. Also, the misconduct was a not only benign or trivial breach, but the conduct was deliberate and unacceptable in law (Jackson, 2020). Besides, it can also be alleged that the Trivago comparison website designed the site with a misleading intention so that consumers are made to believe that they were going to receive the best price deals of any hotel. In essence, the pricing labeled cheap was not the most competitive available.
Furthermore, Nadia Cameron argues that the online hotel comparison site was found guilty of misleading customers from December 2016. The site managed to con consumers by marketing itself with the ability to quickly offer discount prices to customers by identifying the cheapest rates the various hotels were offering for tourists globally. Also, she claims that the management tampered with the algorithms. In most cases, we designers every so often use sophisticated algorithms, machines, and composite website placement and favorable ranking. Therefore, Trivago might have manipulated data in favor of its commercial success and selfish interests as opposed to customer and consumer interests (Nadia Cameron, 2020). Psychologically, Trivago played with the customers’ mind by displaying “prominent hotels” at the top of the website. This action made consumers believe that they were offering great discounts, which was never the case since those were Trivago’s manipulation (Nadia Cameron, 2020).
Moreover, The Australian Court of Law found out that Trivago was guilty of striking through a comparative price and making the highlight of the perceived new cheap price that was discounted. They also made relative pricing techniques misinforming the customers the potential savings if they choose a particular room in a specific hotel. Also, the top priority offers were never the best prices available. Finally, it misleads its customers by creating the impression that they were saving money by receiving the best possible deal for a specific hotel room and services (Jackson, 2020). Nevertheless, according to Justice Mark Moshinsky, the website had several flaws, and not only did they offer misleading and dishonest information, but the design of the site was also suspicious.
The website designers played with color and relative quantity of content available to the consumers. Besides, the disclaimer available in their site was not necessarily sufficient and transparent on pricing and qualifications. Moreover, despite the disclaimer being present, it could not be easily understood by the consumers. Begging the question, are they legally operating?
In a nutshell, all business around Australia wishing to make their advertisements and marketing promotions ought to follow the following simple steps:
- Ads MUST be factual, accurate, and all exemplifications MUST undergo verification. Businesses must not make misleading adverts that might lead consumers to believe what is unverifiable or untrue. In case there is a violation, consumers have the right to litigate against the business, in pursuant of the lawsuit against false advertising, under the Australian Consumer Law.
- Advertisements should openly be obtainable to all consumers.
- Qualifications and Disclaimers must be vibrant, distinct, and easily implicit by customers.
In case a company, business, or individuals engages in deceptive and misleading business practices during promotions or advertisements. According to the Australian Consumer Law, false or dishonest representation can be penalized in the following form; for a corporation, a cash amount not exceeding $10,000,000 or equivalent, a triple amount of benefits received, or 10% annual turnover in previous 12 months and a fine of $500,000 to individuals. This is only applicable if the courts cannot determine the attained from the transgression (ACCC, 2019. Importantly, there are several factors and considerations that the court takes into account before giving fines or pecuniary penalties. Therefore, to determine the most suitable punishment or level of penalty, the calculation is mostly dependent on penalty units in the Crimes Act of 1914.
Conclusion
According to the Australian Consumer Law, the legislation prohibits deceptive or misleading conduct during the advertising or conducts likely to mislead in trade or commerce. Since it is not clear, proved, and evident that Trivago broke the Australian Consumer Law by misrepresentative information presented to customers dishonestly. The courts had the full obligation to issues maximum fines and imposed penalties as required. This judgment will, in the future, act as a lesson to online businesses and e-commerce. Therefore the Federal Court Judge Justice Mark Moshinsky’s rule and position that Trivago was guilty. And it was right for him to state conditions such as the hotels have no right display offers on their sites unless the previous threshold set by Trivago is met.
References
ACCC. (2018, November 1). Legislation. Australian Competition and Consumer Commission. Retrieved May 4, 2020, from https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation
ACCC. (2019, October 1). Fines & penalties. Australian Competition and Consumer Commission. https://www.accc.gov.au/business/business-rights-protections/fines-penalties
Commonwealth of Australia. (2011, January 1). The Australian consumer law. Consumer Law. Retrieved May 4, 2020, from https://consumerlaw.gov.au/australian-consumer-law
Jackson, K. (2020, January 24). Accom celebrates as Trivago found guilty. AccomNews – Australia. Retrieved May 4, 2020, from https://www.accomnews.com.au/2020/01/accom-celebrates-as-trivago-found-guilty/
Nadia Cameron. (2020, January 21). Trivago breaches Australian consumer law with misleading price claims. CMO Australia – Addresses the unique marketing, technology, and leadership challenges chief marketers face. Retrieved May 4, 2020, from https://www.cmo.com.au/article/670387/trivago-found-breach-australian-consumer-law-misleading-price-claims/