Online product comparison website iSelect has been fined $8.5m after admitting in the federal court that its energy price comparison service misled customers.
The Australian Competition and Consumer Commission first filed proceedings against the company in April 2019 alleging it had engaged in “deceptive” conduct over its energy plans.
iSelect had told consumers it would compare all electricity plans offered by its partners and recommend the most suitable one. But, the consumer watchdog alleged, iSelect had limited the number of plans that could be uploaded to its website and failed to adequately disclose that cheaper plans were available only via its call centre.
Thousands of consumers who visited iSelect’s website between November 2016 and December 2018 were misled, the ACCC said. The watchdog’s chair, Rod Sims, said in a statement on Thursday that iSelect “was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers”.
“In fact, about 38% 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,” Sims said.
In an agreed settlement before the federal court, 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 that 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.”
The ACCC chair said comparison websites had a responsibility to ensure their algorithms were correct and to prevent incorrect recommendations. “This is particularly so when they generate significant revenue in commissions from those recommendations,” Sims said.
In a statement to the Australian Stock Exchange on Thursday, iSelect acknowledged the fine and said some of the conduct was the result of a “coding error”.
It said both parties had acknowledged there was “no evidence that iSelect intended to mislead consumers or deliberately contravene the law”.
“The joint submissions also acknowledged the corrective actions taken by iSelect after it was notified of the ACCC’s concerns, including increasing the prominence of disclaimers on our website, as well as iSelect’s cooperation, including initiating settlement discussions, and its compliance program,” the company said.