The Federal Court has ordered that STA Travel Pty Ltd (STA Travel) pay $14 million in penalties for making false or misleading claims when advertising its MultiFLEX Pass product.
STA Travel admitted that, between March 2014 and August 2019, it made misleading representations in MultiFLEX Pass advertising that consumers who bought the airfare add-on could change their flights without paying fees or charges.
"Consumers were misled into purchasing the MultiFLEX Pass on the representation that they would not have to pay anything further for date changes to their flights, when, in fact, STA often charged consumers hundreds of dollars for changing their flights" ACCC Commissioner Sarah Court said.
In many cases, STA Travel's charges were not reflective of additional fees imposed by the airline. For example, in almost a quarter of cases where a customer was charged extra by STA Travel, the amount was more than double the additional airfare and tax imposed by the airline.
"In 12 per cent of cases, STA Travel charged MultiFLEX Pass customers to make a change to a flight although the airline itself had not charged STA Travel anything at all for the change," Ms Court said.
"These penalties serve as a timely reminder to all travel businesses that they must not misrepresent the costs applicable when travel services are changed."
The MultiFLEX Pass cost up to $149 to purchase upfront. Between 2015 and 2019, STA Travel estimates it sold on average approximately 16,000 MultiFLEX Passes per year.
STA Travel admitted liability and made joint submissions with the ACCC to the Federal Court. STA Travel will also contribute to the ACCC's legal costs.
Note
The ACCC initiated proceedings against STA Travel in March 2019 and the proceedings are unrelated to any COVID-19 issues.
Due to the COVID-19 pandemic, the ACCC is assessing the impacts on consumers and working with the travel industry more broadly. Given the circumstances, the ACCC is urging all businesses to treat customers fairly in these exceptional times.
More information on consumer rights during the COVID-19 pandemic can be found here: COVID-19 (coronavirus) information for consumers.
Background:
STA Travel is a national supplier of travel and tourism services. Its advertising targets students and young people and emphasises discounts and flexibility.
STA Travel promoted the MultiFLEX Pass via multiple channels including its website, brochures/flyers, in store posters, a YouTube video and in-store LCD screen displays.
STA Travel sold a range of MultiFLEX Passes to consumers, namely:
- the ONEFlex Pass, costing $49 and allowing one flight date change;
- the '3 Change Pass' or 'Multiflex Pass', costing $99 and allowing three flight date changes; and
- the 'Unlimited' or 'Ultimate' change pass, costing $149 and allowing unlimited flight date changes.
An example of one of STA Travel's misleading advertisements is below:
