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Thursday, 08 October 2020 11:48

iSelect penalised $8.5 million for misleading consumers comparing energy plans Featured

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Online comparison website iSelect has been ordered by the Federal Court to pay $8.5 million in penalties for making false or misleading representations about its electricity comparison service.

The penalties have been imposed on iSelect after the competition watchdog, the Australian Competition and Consumer Commisssion (ACCC), instituted proceedings against the company in April 2019.

iSelect admitted that, between November 2016 and December 2018, it misled consumers by representing on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan, when this was not the case.

The ACCC says that during the period, hundreds of thousands of consumers visited the website and, actually, iSelect’s commercial arrangements with partner electricity retailers restricted the number of electricity plans those retailers could upload onto the iSelect systems, and “therefore the recommended plans were not necessarily the most suitable or competitive”.

“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers. In fact, about 38 per cent of people who compared electricity plans with iSelect at that time may have found a cheaper plan if they had shopped around or used the government’s comparison site Energy Made Easy,” ACCC Chair Rod Sims said.

“iSelect received commissions from the retailers when those consumers selected a plan via the iSelect website or call centre.”

The ACCC says that, in addition, iSelect failed to adequately disclose that cheaper plans from its preferred retail partners were only available via its call centre and were not available through iSelect’s online comparison service. 

iSelect also admitted that, between March 2017 and November 2019, it misrepresented the price of some of the plans it recommended to almost 5,000 consumers.

Because of an error in its website and call centre code, iSelect quoted a total price for some plans which underestimated the cost by up to $140 per quarter.

“iSelect’s misleading conduct may have caused some consumers to switch electricity providers or plans on the basis of a price that was understated or without being aware that a cheaper plan was available,” Sims said.

“It can be complex and confusing for consumers to compare prices and other features of electricity services in a bid to get the best deal for what often is a major household expense. Comparison sites need to make it very clear if their recommendations are influenced or limited by commercial relationships.

“Comparator websites also have a responsibility to ensure that their algorithms are correct, and must implement measures to prevent incorrect recommendations. This is particularly so when they generate significant revenue in commissions from those recommendations,” Sims noted..

iSelect admitted liability and made joint submissions with the ACCC to the Federal Court consenting to the orders sought, including penalties.

The Court also made corrective orders and ordered iSelect to pay part of the ACCC’s legal costs.

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