Comparison site operator iSelect will pay an A$8.5 million penalty for making false and misleading representations about its electricity comparison service.
The Australian Competition and Consumer Commission took the company to court last year, alleging that between November 2016 and December 2018 iSelect claimed consumers using its website would benefit from iSelect comparing all plans available from its partner retailers in a specific location.
During this period, iSelect also claimed that it would recommend the most competitive plan to consumers.
In a joint submission to the Federal Court, iSelect admitted that it did not compare all available plans and did not necessarily recommend the most competitive plan, but rather limited the number of plans it compared based on the commercial arrangement it had with retailers. iSelect did not disclose this information to consumers who used its service.
The ACCC claimed iSelect was actually favouring some partner retailers over others and that the preferred retailers paid iSelect higher commissions.
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 its online comparison service.
The company also misquoted the total price of some plans.
iSelect said in a statement that the joint submission acknowledged that there was no evidence that it had intended to mislead consumers or deliberately contravene the law.
The company said it started taking corrective action once it was notified of the CCC’s concerns. Changes included increasing the prominence of disclaimers on its website.
Regulators have been concerned about the practices of some comparison site operators for a number of years. An ASIC regulatory guide issued in 2012, Advertising Financial Products and Services (RG 234), says comparison sites should disclose any links to the providers of the products that are being compared, including commissions, referral fees, payments for inclusion in comparisons or payments for “featured products”.
ASIC said a warning should be included if not all providers are included in the comparison. If the sites include awards or ratings, the basis for such should be disclosed.
In 2015 the ACCC issued a guide for comparison site operators and their suppliers, highlighting a number of areas where the industry was potentially engaging in misleading or deceptive conduct.
The ACCC said that to promote like-for-like comparisons, operators should disclose what they mean by a value ranking, display any assumptions used when displaying search results, have systems in place to ensure accuracy and ensure that suppliers are providing timely information.
On the issue of transparency, the ACCC said operators should clearly differentiate between sponsored or advertised products and "organic" search results. They should not allow suppliers to pay them a fee or some other benefit in exchange for preferred treatment in search results.
Operators should disclose any commercial relationships even when those relationships do not affect the comparison results.