iSelect in hot water for energy plan comparisons

By Grace Ormsby

October 09 2020
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Comparison tool iSelect has been ordered to pay $8.5 million in penalties for making false and misleading representations about its electricity comparison service.

iSelect in hot water for energy plan comparisons

A statement from the consumer watchdog said iSelect had admitted to misleading consumers by representing on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan between November 2016 and December 2018 when this was not the case.

According to the Australian Competition and Consumer Commission (ACCC), hundreds of thousands of consumers visited the website over this time period.

“Actually, 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,” the watchdog explained.

ACCC chair Rod Sims said the comparison provider “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 or used the government’s comparison site – Energy Made Easy.”

Mr Sims added that iSelect received commissions from the retailers when those consumers selected a plan via the iSelect website or call centre.

According to the ACCC, iSelect also failed to adequately disclose that cheaper plans from its preferred retail partners were only available through its call centre, and not through the online comparison service.

In Federal Court, iSelect also admitted that, between March 2017 and November 2019, it misrepresented the price of some of the plans it recommended to almost 5,000 consumers – which caused a code error that quoted a total price for some plans, which underestimated the cost by up to $140 per quarter.

Mr Sims weighed in to say that “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”.

Acknowledging that “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”, Mr Sims said comparison sites “need to make it very clear if their recommendations are influenced or limited by commercial relationships”.

The consumer watchdog chair added that comparator websites “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,” Mr Sims noted.

Admitting its liability, iSelect did make joint submissions with the ACCC that consented to the penalties the watchdog had proposed.

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

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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