Court fines STA Travel $14m for misleading customers with flight change pass advertisements
The Australian Competition and Consumer Commission has won a court case against STA Travel, with the Federal Court handing down $14m in penalties due to misleading advertisements promoting a flight change pass bought by an average of 64,000 customers across four years.
The ACCC started legal proceedings against the student and youth travel agency in March last year over the way STA Travel marketed its ‘Multiflex Pass’ product. The company admitted that for five years, between March 2014 and August 2019, it made misleading representations in ads for the airfare add-on by claiming customers could change their flights without paying fees or charges.
In fact, they were often charged hundreds of dollars for changing flights, even if the airline did not impose a fee to do so.
By purchasing a pass, customers were entitled to either one ($49), three ($99), or unlimited ($149) flight changes. On average, the travel agency sold 16,000 passes per year between 2015 and 2019, totalling an average of 64,000 customers across the period.
“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 explained.
“In 12% 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.”
An example of one of the misleading ads
And if airlines did charge for the update, in almost a quarter of cases where a customer was charged extra by STA Travel, that amount was more than double the additional airfare and tax cost.
“These penalties serve as a timely reminder to all travel businesses that they must not misrepresent the costs applicable when travel services are changed,” Court added.
Advertisements for the pass appeared on the STA Travel website, in brochures and flyers, on in-store posters, on YouTube, and on in-store LCD screen displays.
STA Travel admitted its wrongdoing, made joint submissions with the ACCC to the Federal Court, and will contribute to the watchdog’s legal costs.
During COVID-19, the ACCC said it is particularly focused on working with the travel industry, which has been economically devastated by the outbreak, and is urging businesses to treat customers fairly.
Brittney Rigby was Mumbrella's deputy managing editor - news and analysis. She left Mumbrella in April 2021.
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What absolutely horrendous behaviour.
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But what an excessive penalty….
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