iSelect to pay $8.5 million for misleading consumers comparing energy plans

AER, class action, Piper Alderman, AGL, iSelect, CER, Q Cells, EnergyAustralia, ACCC, Alinta Energy, Origin Energy

The Federal Court has ordered iSelect Limited to pay $8.5 million for making false or misleading representations about its electricity comparison service, according to the ACCC.

iSelect admitted it misled consumers between November 2016 and December 2018 by representing that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan. Hundreds of thousands of consumers visited the website during this period.

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,” ACCC chair Rod Sims said.

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“iSelect received commissions from the retailers when those consumers selected a plan via the iSelect website or call centre.”

iSelect also 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 it misrepresented the price of some of the plans it recommended to almost 5000 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.

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“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.”

iSelect admitted liability and made joint submissions with the ACCC to the Federal Court consenting to the orders sought.

The Court also made corrective orders and ordered iSelect to pay part of the ACCC’s legal costs, by consent.