21 June 2022
The Australian Competition and Consumer Commission (ACCC) has recently instituted proceedings in the Federal Court against Airbnb, Inc. and Airbnb Ireland UC (together, Airbnb), claiming Airbnb made false or misleading representations to thousands of Australian consumers about the price of their holiday rentals.
The ACCC alleges that between January 2018 and August 2021, Airbnb misled consumers into believing the prices for Australian accommodation displayed on its booking platform were in Australian dollars (AUD), when in fact those prices were in US dollars (USD), leaving consumers significantly out of pocket.
As a result, the ACCC has brought an action claiming that Airbnb made a false or misleading representation in contravention of section 29(1)(i) of the Australian Consumer Law (ACL), contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth); and engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of section 18 of the ACL.
The ACCC alleges that Airbnb – which allows property owners to rent out their homes, villas, cabins, and some of Australia and the world’s most unique accommodation to travellers – made two false or misleading representations that caused harm to Australian consumers.
The first representation is alleged to have occurred when Airbnb listed prices on its website and mobile app for accommodation options in Australia using only a dollar sign ($), without making it clear that those prices were in USD (and not AUD).
The ACCC allege that, despite Airbnb referring to the price as USD in small print on the last page of the booking process, on at least some occasions, this happened only after the platform had already displayed numerous dollar amounts on earlier pages, without nearby reference to USD, and after the consumer had already clicked to ‘reserve’ their accommodation.
The second representation relates to the consumer complaints that followed. The ACCC allege that when consumers complained to Airbnb about being charged more than the displayed price, many of them were told the platform had displayed prices in USD because the user had selected this currency.
The ACCC alleges that affected consumers suffered harm as a result and Airbnb stood to benefit from the representations.
Consumers to whom Airbnb made the first representation incurred the cost difference between the USD price and the price they would have paid if charged in AUD. During the relevant period, the ACCC notes that the average exchange rate was about $0.72 USD, so the consumer would have paid a much higher amount for the accommodation than expected. In some cases, consumers were also charged other bank fees such as foreign currency conversion fees.
In addition, the ACCC claims that consumers were “deprived of the opportunity to make an informed choice about whether, and at what price, to book their holiday accommodation on the Airbnb platform”. Airbnb would have gained a competitive advantage over other booking sites by misleading consumers to book accommodation on its platform which may not have otherwise been booked if consumers were aware that the price displayed was in USD rather the AUD.
Furthermore, by making the second representation, the ACCC alleges that Airbnb discouraged consumers from pursuing their rights under the ACL.
Despite thousands of consumers complaining to Airbnb about the way prices were displayed, Airbnb did not amend its booking platform until after the ACCC raised the issue with them.
As a result of the alleged contraventions, the ACCC is claiming a wide range of remedies, including declarations, injunctions, pecuniary penalties, orders for redress for non-party consumers and publication and compliance orders under the ACL, as well as costs.
This is not the first time the ACCC has pursued Airbnb for concerns about the way prices were displayed on its website and apps. In 2015, Airbnb Ireland provided the ACCC with a court-enforceable undertaking after it failed to adequately disclose a mandatory service fee and cleaning fee where applied by an accommodation host.
The proceedings against Airbnb also follow the ACCC’s recent enforcement success in the travel and leisure industry after obtaining a $44.7 million penalty against hotel aggregator Trivago for making misleading representations about hotel room rates on its website and in television advertising, and defending an appeal by ticket reseller Viagogo after receiving an earlier $7 million penalty for misleading consumers about the price they would pay for tickets.
Consumer and fair trading issues relating to manipulative or deceptive advertising and marketplace practices in the digital economy remain compliance and enforcement policy and priorities for the ACCC in 2022-23.
Specifically, Mr Rod Sims (the then chair of the ACCC) stated regarding this priority:
“Well-functioning online markets are key to a modern economy. To realise the full benefit, consumers must be confident to engage with online businesses. Consumers are facing a growing number of manipulative or ‘dark pattern’ techniques to exploit or pressure them.
Other practices that seek to distort or disregard consumer choice in the digital economy include manipulation of online reviews and search results, and social media influencers who don’t disclose they are paid to promote the products they are pitching. All these practises direct consumers towards certain products rather than organic search results that best match their search terms.”
This priority was reinforced by new ACCC chair, Ms Cass-Gottlieb when announcing the action against Airbnb.
With this action, the ACCC is stating very clearly that it has no reservations in pursuing digital platforms to ensure the accuracy of all statements that may affect consumers’ purchasing decisions.
Our team can assist you in understanding the prohibitions in the ACL and managing the risks associated with digital advertising and ensuring the accuracy of such statement that may affect consumers’ decisions, particularly in the online digital environment.
If you have any questions, please contact us below or get in touch with our team here.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.