Jetstar and Virgin fined $745,000 for advertising fake airfares
Virgin Australia and Jetstar have been ordered to pay fines of nearly three quarters of a million dollars after they were found to have duped consumers by advertising fake airfares which ballooned as people moved through their web and mobile sites.
The Federal Court ordered the fines after after convicting both airlines of misleading and deceptive conduct. Jetstar’s breaches related to specific advertised airfares on its website in 2013 and on the mobile site in 2014. Virgin was found to have made false or misleading representations about specific advertised airfares on its mobile site in 2014.
The Australian Competition and Consumer Commission alleged the budget carriers had used “drip pricing” which lured consumers with cheap fares before adding additional fees and charges.
In imposing the penalty against Jetstar this week, Justice Foster commented on the importance of the concept of general deterrence in the imposition of penalties, and noted that the penalty imposed is designed to discourage similar behaviour by others.
ACCC chairman Rod Sims said the fines should be a warning to other companies seeking to lure customers with cheap prices, only to inflate them during the purchase process.
“The ACCC was concerned that Jetstar and Virgin’s ‘drip pricing’ conduct drew consumers into an online purchase process with a headline price, but failed to provide adequate disclosure of additional fees and charges that are likely to apply,” Sims said.
Speaking after the airlines were originally convicted in 2015, Sims said the practice led to consumers paying more than they expected after seeing a cheap fare.
“Drip pricing is where a headline price is advertised at the beginning of an online purchasing process and additional fees and charges (which may be unavoidable or applied in most transactions) are then incrementally disclosed (or ‘dripped’),” he said.
“This can result in consumers paying a higher price than the advertised price, spending more than they realise and making it more difficult to compare offers.”
While the court rejected some of the accusations of drip pricing levelled by the ACCC, it ordered Jetstar pay $545,000 for its breaches and Virgin Australia pay $200,000.
“While the Court found that the ACCC had not established all of the allegations against Jetstar and Virgin, the findings that some of their conduct was misleading are significant,” Sims said.
If the advertised price is “too good to be true” – then it probably isn’t true!
Pricing for drips?
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glad they’ve been fined – in particular, the Jetstar booking process is a disgrace
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