iSelect penalised $8.5m for misleading consumers comparing energy plans
This article is part of the November 2020 edition of our competition law newsletter, focusing on some recent key developments.
On 8 October 2020, the Federal Court of Australia ordered iSelect Limited ("iSelect") to pay a pecuniary penalty of AUD 8.5 million for making false or misleading representations on its website when comparing and selling electricity plans, in contravention of the Australian Consumer Law ("ACL").
iSelect represented that it would compare all electricity plans offered by its commercial partners and recommend the most suitable or competitive plan to consumers, when this was not the case. iSelect also made false or misleading price representations on its website where, due to coding errors, prices were misquoted to almost 5,000 customers between March 2017 and November 2019.
iSelect admitted liability and consented to the orders sought by the ACCC, including the AUD 8.5 million penalty and an order to publish corrective advertising.
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iSelect is a commercial price comparator which compares utilities, insurance and finance products. It does not charge consumers for using its comparison service, but is paid fees and commission by its partner retailers when a consumer purchases an energy plan through iSelect.
Between November 2016 and December 2018, iSelect represented on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan.
In reality, iSelect's commercial partner arrangements restricted the number of plans that its partners uploaded onto its website, so the recommended plans were not necessarily the most competitive, nor did it include all available plans in the consumer's requested area. In addition, iSelect also failed to adequately disclose that cheaper plans from its partners were only available via its call centre and not through the online comparison website.
For these contraventions, the Court considered the AUD 7.3 million penalty jointly proposed by the parties to be appropriate, as the representations had a high degree of visibility and disclosures were not prominent or proximate to the misleading statements. The Court considered the statement "Find the most competitive rates… [on iSelect]" to be "particularly troubling" as it appeared prominently on iSelect's homepage and senior management had approved it, despite being aware of the terms of iSelect's commercial partner arrangements.
iSelect also admitted that between March 2017 and November 2017, the prices of some recommended plans were misrepresented to almost 5,000 consumers due to coding errors in its website. Some quotes underestimated the total cost of plans by up to AUD 140 per quarter. The Court noted that although there was no evidence that the error was deliberate, iSelect is a publicly listed company with significant resources and its core business is the provision of a comparator dependent on accurate underlying coding. The Court considered its failure to prevent such coding errors to be a significant compliance failure, and it approved the penalty of AUD 1.2 million proposed by the parties.
iSelect admitted liability and consented to the orders sought by the ACCC, including the total penalty of AUD 8.5 million, an order to publish corrective advertising and for iSelect to pay part of the ACCC's legal costs.
In approving the penalties, the Court noted that energy services are a household essential which consumers find complex and confusing to compare, and that iSelect's plan and price misrepresentations would have diminished consumer choice. This case is also a reminder that merely running compliance training is insufficient; iSelect had a compliance program in place but the Court noted that relevant personnel must actively turn their minds to the question of whether representations are potentially false or misleading.
With thanks to Andrew McClenahan, Lawyer and Karen Zhong, Graduate for their contributions.
Contents
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- HeidelbergCement and Schwenk fail to overturn Commission cement merger prohibition
- Commission accepts Broadcom's offer to stop exclusivity on chipset markets
- EU FDI Screening Regulation goes live
- iSelect penalised $8.5m for misleading consumers comparing energy plans
- Event ticket reseller viagogo fined $7m for misleading consumers
- Paris Court of Appeal upholds interim measures order on Google
- Energy companies fined for gun-jumping in Italy
- Singapore e-commerce platforms market study recommends update to competition guidelines
- Spanish High Court rejects appeal against Land Rover dealer cartel
- CMA consumer law push continues - Care UK to refund unfair "shortfall" fees
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