iSelect Penalised $8.5M For Misleading Energy Plans
iSelect has been fined $8.5 million for misleading consumers about energy plans on its online comparison service, failing to present cheaper plans from its retail partners.
The company has admitted between November 2016 – December 2018 it informed consumers it would compare all electricity plans from retail partners, and advise the most competitive or suitable option, but this was not the case.
The ACCC found iSelect’s commercial partner arrangements restricted the number of electricity plans retailers could upload, with its web service recommending options which were not necessarily the most competitive or suitable.
“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers,” states ACCC Chair, Rod Sims.
“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.”
“iSelect received commissions from the retailers when those consumers selected a plan via the iSelect website or call centre.”
The company also failed to adequately inform consumers that cheaper plans were available from its retail partners via its call centre, and not available via the iSelect online comparison tool.
iSelect has also admitted that between March 2017 – November 2019 it misrepresented the price of some plans to around 5,000 customers due to an error on its website and call centre code.
In some cases, iSelect underestimated the total price for plans for 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,” adds Sims.
“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.”
iSelect has admitted liability and made joint submissions with the ACCC to the Federal Court consenting to orders sought, including penalties.
It comes after the ACCC instituted proceedings against iSelect in 2019, after the ASX-listed entity started its retail electricity comparison service in 2012.
“Comparator websites also have a responsibility to ensure that their algorithms are correct, and must implement measures to prevent incorrect recommendations,” states Mr Sims.
“This is particularly so when they generate significant revenue in commissions from those recommendations.”
Over the last two years iSelect has provided over 4 million energy comparisons.
The news comes after the ACCC released its Retail Electricity Pricing Inquiry, recommending a mandatory code to third-party electricity comparators to ensure commercial relationships are adequately disclosed.