If you run a business, you should be careful to make sure your business practices do not mislead or deceive customers. A recent case found that Trivago, a hotel booking and comparison site, breached the Australian Consumer Law (ACL) when it mislead the public about hotel room rates on its website and in television advertising. Below, we unpack: 

  • what misleading and deceptive conduct is;
  • how Trivago made misleading representations; and 
  • how you can avoid the same mistakes.

What is Misleading and Deceptive Conduct?

As a business, you should not engage in conduct that is misleading or deceiving. Importantly, you must also avoid undertaking conduct that is likely to mislead or deceive your customers. Misleading conduct and deceptive conduct have two separate meanings:

Misleading Leading another party into an error.
Deceptive Deliberately leading another party into an error.

The main difference is whether you mislead someone, which could happen by mistake, or if you deliberately deceive someone.

When asking yourself whether your conduct could be considered misleading or deceptive, you should consider whether the overall impression created by your conduct is false or inaccurate. If there is a situation where the public would expect you to disclose particular information, you should make an effort to do so.

Who Does it Apply To?

The laws surrounding misleading and deceptive conduct provide a standard that businesses should uphold in all commercial transactions. This includes:

  • in the sale of your products or service;
  • when advertising your business; 
  • when packing and labelling your products; and
  • in business to business dealings, for example, negotiating a contract. 

Misleading and deceptive conduct laws do not apply if the conduct was not done in trade or commerce. 

For example, actions will not be completed in trade or commerce if they were for internal communication in an organisation.

To get in trouble for misleading or deceptive conduct, someone will need to take you to court. This could either be a customer of yours, or the government watchdog, the Australian Consumer Commission (ACCC). In the case of Trivago, it was the ACCC that brought the case against them.

How Was Trivago Misleading? 

Trivago is a hotel booking and comparison site. Their website aggregates deals from accommodation websites for available rooms at a particular location and time. It then highlights one offer, the ‘Top Position Offer’, to show the best deal. 

Trivago misled consumers by not showing customers the cheapest deals for hotel rooms and instead promoting advertisers that paid them the highest fees. In doing so, Trivago represented that the ‘Top Position Offer’ was the cheapest offer, when in some cases, it was not.

Further, in some instances, Trivago used techniques to give consumers the false impression of savings by comparing an offer for a standard room with an offer for a luxury room.

It was found that Trivago’s behaviour was misleading. This is because many consumers relying on their website were tricked by the display of information and thought they were getting a great deal when they were not. Trivago will need to pay penalties, the amount of which is still being considered by the courts.

What You Can Learn From Trivago

The decision in the Trivago case sends a strong message to businesses to be more transparent when other companies are paying them for advertising. Particularly, if advertising influences the ranking of search results, this should be clearly communicated to consumers, so they are not misled.

This case illustrates that the ACCC is cracking down on businesses that engage in misleading and deceptive practices. Therefore, you must take steps to avoid any misleading conduct occurring within your business. Here are four practical tips to implement within your business:

1. Ensure Information Is Accurate

Make sure your website and any advertising materials show the correct information about your business. This includes any information relating to:

  • pricing;
  • discounts; 
  • availability; 
  • inclusions; and
  • general characteristics of products. 

For example, in the case of Trivago, the way certain information was presented gave the incorrect impression that consumers were getting the best deal. 

To combat this occurring, you should formulate internal procedures to ensure that information about your products and services is truthful and accurate.

2. Disclose Business Relationships

If you have any relationships with third parties that your consumers should know about, clearly disclose this to them. 

For example, if you run a price comparison website, you should clearly disclose you are not related to the third parties you are comparing. You should also ensure that customers are aware of the origin of any information you provide about third parties.

Alternatively, if you are advertising for a third party, it should be clear that that third party has paid for a premium position on your website. Further, you should also make every effort to make sure this information is kept up to date.

3. Understand Your Audience

Whether your marketing or promotional materials will be considered misleading or deceptive will often depend on who receives the message. 

For example, statements made by your business on television or radio are likely to have a much greater reach and impact than claims made by your sales team.

Therefore, by better understanding who exactly is going to receive your marketing, you can ensure that it will not be misleading for them.

4. Disclaimers Must Be Clear

If your advertising includes small print or disclaimers, make sure that they are clear and obvious. You will need to ensure that your consumers can see and understand these messages.

Key Takeaways

The ACCC is cracking down on businesses that engage in misleading and deceptive conduct. The Trivago case shows that if the ranking of results in comparison websites or search engines is influenced by third parties, you should be clear and upfront about this with your customers. To avoid making the same mistake, you should thoroughly check that you are not misleading consumers through:

  • your advertising materials;
  • the way you display information online; or
  • showing incorrect information about your products or services.

If you are concerned about how the requirements to avoid misleading and deceptive behaviour may impact your business, contact LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Lauren McKee
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