The Federal Court made its judgement yesterday, 20 January 2020 in this matter which I wrote briefly about here in late 2018 (and have talked to many about). Whilst the case ended up being convoluted as ever and some conduct was held not to be in breach of consumer law as changes had been made to the way things were presented, Trivago was found by the court to have engaged in conduct that was misleading and deceptive or likely to mislead or deceive (and thus contravened s 18 of the Australian Consumer Law), AND conduct that was liable to mislead the public as to the nature, characteristics and suitability for purpose of the accommodation search service provided by their website (and thus contravened s 34 of the Australian Consumer Law), for key conduct during the most pertinent times in question in the ACCC complaint, i.e. during their massive ad-campaigns and prior to being sued.
I am currently analysing the legal reasoning of the decision in detail and will make my more detailed thoughts available to those interested (just contact me) in the coming few weeks, but I wanted to make some summary comments particularly for my travel industry colleagues before people’s attention moves on. Although the headlines today proclaim a “stunning victory” and the general consensus seems to be one of surprise that the ACCC proved its case to Justice Moshinsky’s satisfaction, from where I sit its quite to the contrary, guilt where found in this case was super obvious, where guilt wasn’t found I strongly suspect Trivago had third party help with their copy and campaigns (they were on notice and in court with the ACCC after all). The decision deals with several different periods of time, at least 4 “Website versions” and a range of different sale features including “Cheapest Price Representation”, “Strike Through Price Comparison”, Top Position Representation” and more, too detailed to deal with here, but basically all different ways of comparing and presenting accommodation offers on the Trivago site. Trivago was ably defended by a law firm I respect greatly who no doubt had input into the copy that went on the Trivago site post July 2018 - most but not all of which was found not to be misleading and deceptive or likely to mislead/deceive - but for pretty much everything that went on prior to July 2018 in terms of a massive advertising campaign that must of cost millions and a ramp up of business by Trivago in Australia, they were found to have breached consumer laws (penalties etc tbc).
WHY DIDN’T TRIVAGO GET EXPERT HELP EARLIER BEFORE SPENDING MILLIONS ON ADVERTISING? If they did and they received bad advice that is another issue of course - maybe they ignored the advice, but its a bit late when you get your first good practical advice - help with copy, designing promotions online etc when you are already halfway through a Federal court case with the ACCC. I see this constantly in the Australian travel and other industries, a reluctance to procure professional help in some areas, especially marketing, advertising, web-copy, even contract review, due to its up front cost, yet a much greater investment is often risked without it. Ideally in-house staff who are in charge of copy and campaigns (or contract negotiation) need to be brought up to speed and trained in the relevant regulations/risks - but their work still needs to be periodically reviewed/supported by experts who can be more objective and critical. I remember doing a lightning tour of Australia at a former employer to train marketing and sales staff across national brands in key issues of compliance where we had live concerns about consumer law compliance. It was a tough time, quite an experience which was a shock to the business which had been merrily operating without much expert oversight, but full credit to the staff involved and the leadership at the time for being proactive - it seemed to put an end to ongoing stoushes with the ACCC during that era in those businesses, and although not as exciting as a bonus “famil” trip overseas, many of the staff in those travel businesses contacted me personally at the time and some later to express their appreciation at having had some complex concepts demystified for them - they took the learning away with them into their careers.
Rant over, back to Trivago. They and their team should of known better than to turn to computer science to defend themselves in this sort of matter. Tech and algorithm excuses (gosh this reminded me of the music file sharing cases I was involved with in a past life in the mid noughties - i.e. tech companies disclaiming their control over technology and claiming the mysterious tech processes were not doing what common sense, and tech evidence eventually, plainly showed they were) will not wash with an Australian court in consumer law cases when it comes to misleading and deceptive conduct under the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974). Trivago looked even worse as they didn’t call their in-house tech people to give evidence, everyone left to wonder what they had to hide…. It was left to the academics to opine when there are a long line of cases/complaints which any analysis of will tell you the court will look at the plain meaning of the wording/copy used in the advertisements/promotions in question and consider what the consumer being targeted will likely understand from the wording used. In legal speak an objective test is applied to determine the effect of representations on the “ordinary or reasonable consumer” to whom the conduct is directed (when there are TV ad campaigns as in this case that’s a lot of consumers with very varied understandings of everything, much less the travel product distribution landscape which most of them will have a cursory understanding of at best).
So, if a comparison site says in its ads something like “we’ll find you the best price” but it later says it really means “we meant we’d find you the best value in our opinion based on a number of secret factors we consider, that vary, from time to time and are secret, one of which may by coincidence mean that often the provider of the promoted option pays us more”, what do you think the reasonable consumer will say to that proposition after they have spent their hard earned?? It’s the same as luring consumers in with amazing offers and burying nasty exclusions or extra costs in fine print - its often going to contravene the law. Offers need to be clear and transparent in Australia. Excite your customer sure, puff away, but don’t mislead as to what service you are providing or its relative cost.
A couple of initial thoughts for online businesses coming out of this case. If a site markets itself as a comparison site or aggregator of flights, holiday packages, accomodation or whatever, you need to be very clear about what service you are offering, and especially what content you are highlighting and promoting on your site. If its not a cheapest price search service be very clear about that as this is what many of those ordinary “reasonable consumers” will be expecting (we’ve now had several similar travel product provider cases where findings have been very consistent). You copy and your messaging must be clear as to what is being offered or promoted at all times. And get help regularly to ensure you don’t ever fall into the types of traps Trivago and many before them have fallen for.
