An announcement yesterday that Jetstar had been ordered to pay a $1.95 million penalty for making false or misleading representations about consumer guarantees sends a strong message to Australian businesses.
The Federal Court found that Jetstar's terms and conditions breached the Australian Consumer Law (ACL) by claiming that the consumer guarantees offered by the law didn't apply to the airline's flight services.
"Jetstar's representations were false or misleading because all flights come with automatic consumer guarantees that cannot be excluded, restricted or modified, no matter how cheap the fare," ACCC Chair Rod Sims said.
"If a flight is cancelled or significantly delayed, passengers may be entitled to a refund under the consumer guarantees. All consumers have the right to a remedy, such as a refund, if services are not supplied within a reasonable time."
A message for Australian businesses
In reporting the outcome, the ACCC revealed that Jetstar has also committed to amend its policies and practices to ensure that they're consistent with the ACL. It's a commitment that should make all Australian business take notice.
"Don't play games with consumer rights," says Erin Turner, director of campaigns and communications at CHOICE.
"This is an important message to all Australian businesses – be honest with Australians about their consumer rights.
"Every Australian should be informed and empowered to access and use their consumer rights. Practices like claiming that 'no refunds' apply when they do are not acceptable in a fair-minded community."
All flights come with automatic consumer guarantees that cannot be excluded, restricted or modified, no matter how cheap the fare
Turner's statement echoes the message from the ACCC chair.
"Businesses simply cannot make blanket 'no refunds' statements, because they can mislead consumers into thinking they can never get a refund under any circumstances," Mr Sims said.
"This decision is a warning to all businesses that misleading consumers about their rights breaches the Australian Consumer Law, and doing so may result in multi-million dollar penalties."
CHOICE's 2016 Fare Play report
Our 2016 Fare Play report and ACCC complaint focused on:
- ensuring communication of delays/cancellations and compensation is fair
- unfair cancellation fees
- airline communication of consumer rights – specifically the incorrect inference that refund laws don't apply to airlines.
"CHOICE raised issues with Jetstar's 'no refund' claims in December 2016," says Turner.
"The ACCC recognised the issues consumers were facing with airlines, releasing clear warnings and guidance about consumer rights.
"We congratulate the ACCC on this legal win that shows that businesses can't opt-out of the consumer law. Businesses big and small should take this as a message to take their consumer obligations seriously."
CHOICE will continue to call out businesses and work with government and regulators to address unfair business behaviours.
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