The ACCC recently took enforcement action against Webjet Marketing Pty Ltd (Webjet) and Koala & Tree Pty Ltd (trading as Koala Living) for allegedly making false or misleading representations about flight prices and consumer rights.
These cases highlight the critical importance for businesses to accurately advertise prices and clearly communicate customers’ rights under the Australian Consumer Law (ACL). More details on the actions taken are outlined below.
Webjet
On 28 November 2024, the ACCC commenced proceedings in the Federal Court against Webjet for allegedly making false and misleading representations to customers about the prices and bookings of flights via its app and website. Webjet offers online booking services for flights, hotels, car rental and travel insurance, allowing customers to compare different services in the same category.
The ACCC alleges that Webjet breached the Australian Consumer Law (ACL) by making statements through its app, marketing emails, social media channels and website about the minimum price of airfares offered on its site, without disclosing the compulsory fees Webjet charges which range from $34.90 to $54.90 (being the ‘Webjet servicing fee’ and ‘booking price guarantee fee’). The statements, which included “flights from $X” or “flights from $X*” were made over various periods between November 2018 and November 2023. These fees were not disclosed at all in Webjet social media posts, and were only disclosed on the website, app and a majority of promotional emails at the bottom of the screen in fine print, which the ACCC argues is not clear or prominent enough.
Example of social media post made in the relevant period
The ACCC also alleges that Webjet breached the ACL in relation to 382 bookings by displaying a confirmation page and sending the customer a confirmation email after taking payment when it had not, in fact, booked the relevant flight with the airline. In these instances, despite having confirmed the booking, Webjet then allegedly sought additional payment from the customers to complete the booking or offered the customers a refund. These representations were allegedly made between at least November 2018 and June 2024. The concern is that customers may have relied on the confirmation to make other travel arrangements, or be forced to pay an additional sum to keep the flight.
The ACCC is seeking remedies including pecuniary penalties, declarations, injunctions, consumer redress and costs. A copy of the ACCC’s concise statement can be found here. We’ll continue to monitor this case and provide updates on future developments.
Koala Living
The ACCC announced that it had issued Koala Living with three infringement notices (totally $56,340) for making false or misleading statements about consumers’ rights to remedies for faulty products (see more information here).
The ACCC became aware of the issue after receiving complaints from customers. The ACCC alleged that Koala Living wrongly represented that:
- Customers’ rights to remedies for faulty products were limited to a 72-hour period or the manufacturer’s warranty period. Rather, customers’ rights under the consumer guarantees are not limited to a specific period of time, and will depend on several factors including: the nature, price, features and age of the goods or services, instructions and warnings, and likely use of the product.
- It could choose the type of remedy for minor and major failures. For minor failures, Koala Living can choose to provide a refund, replacement or repair the product. For major faults, the customer can choose between a refund or replacement.
- Delivery charges were not refundable. In fact, customers have the right to compensation for foreseeable loss or damage (including delivery charges) due to non-compliance with the consumer guarantees.
Koala Living admitted that its conduct likely contravened the Australian Consumer Law. In addition to paying the infringement notices, Koala Living also entered into a court-enforceable undertaking which requires it to, among other things:
- provide compensation to consumers identified as having been affected by Koala Living’s false representations that their right to a remedy under the consumer guarantees was limited to a 72-hour period. The compensation is equivalent to 20% of the purchase price and is separate and in addition to any remedies consumers may be entitled to under the consumer guarantees;
- cease making the false or misleading representations on its website and in other materials;
- review its policies and procedures, including its complaints handling procedures and training, to ensure staff understand the business’s consumer law obligations;
- inform customers that its previous representations on its website were misleading and deceptive through corrective notices published on its website and social media channels; and
- establish a competition and consumer law compliance program.
A copy of the undertaking can be found here.
This enforcement action further reinforces the ACCC’s continued focus on industry compliance with the consumer guarantees (an enforcement priority in 2023-24 and 2024-25).
Key takeaways
- Transparency is key: Businesses must ensure the advertised prices are clear and inclusive of all compulsory fees or surcharges. Disclaimers cannot be used to correct a misleading headline claim, and reliance on information in fine print (which is not prominent or proximate to the claim) can lead to serious legal consequences.
- Accurate communication of customers rights under the ACL: Companies must provide correct information regarding customers’ rights, especially concerning warranties and the consumer guarantees. Misleading customers about their rights can result in penalties and the need for corrective actions.
- Staff training and compliance programs: It is essential for businesses to have appropriate training for customer service staff and systems in place to ensure that customers are not misled. Companies that fail to do so risk further scrutiny and enforcement action from regulators like the ACCC.
