What you need to know about comparison websites

By LESLEY GREGORY

Have you used a hotel booking website to find accommodation when going on holiday? Perhaps you’ll look at energy or insurance comparison websites as you review your budget or contracts this year. These sites can save you time and effort, but they may not be saving you as much money as you think.

A court ruling earlier this year against the Australian arm of a popular hotel booking service, for instance, found it had misled consumers on its website and in its TV advertising. Rather than helping find the cheapest rate for a given hotel as consumers expected, it had used an algorithm that put significant weight on the hotel services that paid it the highest fees, the court found.

Higher-priced room rates were selected as the “Top Position Offer” over alternative lower-priced offers in 66% of listings, the court heard. The Australian consumer regulator was also unhappy with visual devices like font colour that it said implied savings when often what was being compared was a standard room with a luxury room at the same hotel.

“This decision sends a strong message to comparison websites and search engines that if ranking or ordering of results is based or influenced by advertising, they should be upfront and clear with consumers about this so that consumers are not misled,” the Chair of the Australian Competition and Consumer Commission, Rod Sims, said after the ruling.

Here are the three things you need to know about a comparison website before putting too much weight on its recommendations.

1. They may be free, but they make money

The first thing to understand is that almost all comparison websites – with the exception of some government-provided services – are commercial operations that need to make a profit. And if they’re offering a “free” service to you, the consumer, they must be making their money some other way.

They might do that through fairly obvious advertising on their site from companies hoping to sell you a product. They might also do that through “sponsored” links or by showing sponsors’ products higher in their lists. And they will almost certainly receive a commission from their “partners” each time a customer buys a product or service after visiting their site.

Check: Is the comparison site upfront on its website about how it earns its money?

2. They compare some, not all, products

It would be easy to assume that a comparison site compares all the products available, in their various forms and from various providers. In fact, it is a rare comparison service that does that. Insurers, energy companies and other providers tend to list only a subset of their products and services with a comparison site, and it’s that restricted pool that’s being compared.

Check: Does the site spell out the brands and products on its platform? Look for fine print like this: “We do not compare all brands in the market or all products offered by all brands. At times certain brands or products may not be available or offered to you.”

3. They may not list offers in the order you’d expect

As explained above, the order of listings may be influenced by arrangements between the comparison website and the providers/sponsors/advertisers on its platform. Don’t just look at the top-listed offer; drill down a bit further to see if there is in fact a cheaper price or a deal that has better features, like free breakfast and parking or a discount for paying early.

Check: Have you clicked on “More deals”? Maybe there’s a better one for you in the expanded, not just sponsored, list.

In short, use a comparison website as the start of your search, not the end. Even better, check out more than one comparison website to increase the range of offers you access. And check to see if there are government-run or accredited comparison websites you could use, as in the energy market.

Don’t forget to consider your individual circumstances – the cheapest offer isn’t necessarily the best, depending on the features you need.

Remember, too, that you can always use your comparison site research as a bargaining tool with your current provider.