The Federal Court has ordered iSelect Limited to pay $8.5 million in penalties for making false or misleading representations about its electricity comparison service.
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. During the period, hundreds of thousands of consumers visited the website.
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.”
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,” Mr 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,” Mr Sims said.
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, by consent.
The ACCC instituted proceedings against iSelect in April 2019.
iSelect Limited (ASX: ISU) is a commercial price comparator which compares utilities, insurance and finance products. It commenced retail electricity comparison services in 2012.
In the last two years, iSelect has provided over 4 million energy comparisons. iSelect does not charge consumers for use of its comparison service. It is paid fees and commissions by its partner retailers when a consumer who has used the comparison service purchases an energy plan through iSelect.
iSelect compares electricity services in South East Queensland, New South Wales, the Australian Capital Territory, Victoria and South Australia.
In July 2018, the ACCC released its Retail Electricity Pricing Inquiry report, recommending a mandatory code apply to third party electricity comparators to ensure that comparators adequately disclose their commercial relationships and the influence that such relationships have on their recommendations.
More information is available at Comparator websites.
Consumers can compare generally available electricity plans in their area via the Australian Government’s Energy Made Easy website.