Australian company iSelect has come under fire by the ACCC and been ordered to pay a whopping $8.5 million in penalties due to misleading customers using its electricity comparison service.
The popular website, which is meant to help people select the best value deal for their situation, admitted to making false or misleading representations between November 2016 and December 2018. The company claimed to customers that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan.
However, iSelect actually had commercial arrangements with partner electricity retailers which restricted the number of electricity plans those retailers could upload onto the iSelect systems. This meant that the recommended plans were not necessarily the most suitable or cost-effective.
“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers,” ACCC Chair Rod Sims said. “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.”
He added: “‘iSelect received commissions from the retailers when those consumers selected a plan via the iSelect website or call centre.”
In addition, the company failed to adequately disclose that the cheaper plans from its preferred retail partners were only available via its call centre and not through iSelect’s online comparison service. Plus, 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 on its website and call centre code, the company quoted a total price for some plans which underestimated the cost by up to $140 per quarter.
According to Sims this 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.
“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,” he said. “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.”
iSelect has 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, by consent.
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