Surprise! Australian Airlines – fast and loose with consumer law. ACCC report

The Australian Competition and Consumer Commission (ACCC) has been having a little poke around the terms and conditions of some of the airlines’ consumer contracts, to check if they are complying with Australian Consumer Law (ACL). Below is my interpretation of what the report says, but you can have a look at the report yourself. It’s an easy read of about 7 pages.

Airlines must ensure they comply with the Australian Consumer Law (ACL), avoid unfair contract terms and make sure their terms and conditions are consistent with consumer guarantees.

The little ‘look/see’ seems to have been prompted by roughly 1400 complaints to the ACCC over a two year period from early 2016 to late 2017, as well as complaints to Australian state-based fair trading agencies. The Australian consumer-based magazine CHOICE has also had this as an area of interest, launching a ‘super complaint’  with the ACCC and:

. . . asking the regulator to take a good hard look at the sector . . .

They have zeroed in on three areas:

1. ‘No Refund‘ statements
2. Excessive fees – for cancellations and changes
3. Misrepresentation of consumer rights under Australian Consumer Law (ACL)

NO REFUND

It seems the ACCC thinks that some airlines have been playing a little fast and loose with what consumers are entitled to under ACL. By placing ‘No Refund’ policies prominently, and then burying the qualifications that keep those policies within ACL – they are effectively misrepresenting consumer entitlements:

. . . the ACCC is concerned that these qualifications are not sufficient to clarify the initial and prominent no refund representation. The Airlines’ Conditions of Carriage are lengthy, often in fine print, and it can be difficult for consumers to find the relevant information.

And as for online bookings, the ACCC is prepared to take no prisoners:

The ACCC will continue to monitor how information about refunds is conveyed by the Airlines, and take enforcement steps where broad and misleading ‘no refund’ claims are made.

Excessive Fees – for cancellation and changes

The ACCC summarises consumer complaints into the following areas:

• Fees don’t factor in how early or late a cancellation is made
• Some fees are way to high as a percentage of the total fare – they give an example where the cancellation fees amounted to 57% of the fares
• Fees charged through the airlines’ actions – where the airline changes flight times or dates forcing the consumer to change arrangements and then charges a fee to the consumer for the change.

Unfair terms in ‘standard’ contracts

This is where the airline prepares the contract and offers it to consumers on a ‘take it or leave it’ basis – with no room for negotiation. If there is a big imbalance between the parties rights and obligations, or a term is unreasonable, or if a term would cause ‘detriment’ (not just financial) if it was relied on, then the ACCC doesn’t think that is on.

What is the ACCC going to do about this?

Well, the report effectively tells the airlines that if they stuff around a consumer though things they have control over – like canceling or changing the schedule of a flight, then the ACCC is not a happy chap.

It also thinks that if an airline charges a fee if a consumer breaches a term of the contract, but the same penalty does not apply when an airline breaches the contract – then that’s not a balanced (fair) contract.

From the complaint data, there appears to be an imbalance in rights between consumers and the Airlines, and the Airlines are entitled to make unlimited changes whereas the consumer is financially penalised for making even minor adjustments.

The ACCC is saying – ‘OK Airlines, let’s talk about this’ . . . but if the airlines don’t address these issues then the ACCC is in its quiet, measured, bureaucratic way threatening action.

In or out of the airlines control

The ACCC points to a disconnect between what airlines think is ‘within their contro’l, and the way consumers might see it. They also say that if consumers perceptions are correct, that – let’s say a flight cancellation is actually due to the airlines’ inability to sell enough seats but is portrayed as being caused by something outside their control, then the ACC will really not be happy, or as they put it:

This issue is of significant concern to the ACCC and we will be making specific enquiries of the Airlines to examine it further.

What do consumers complain about?

Well, there are not a lot of surprises here. I think most of you, dear readers, and as customers of airlines could predict them:

• Unsatisfactory outcome. They give an example of a consumer who had a sector of their return tip canceled, and the airline refused to provide a refund unless they paid an $80 fee.
• Gesture of goodwill. Getting a solution – but not as a consumer right, but as a gesture of ‘goodwill’ by the airline. The outrageous example they give is of consumers being refused carriage on the grounds that the flight was overbooked, and then trying to charge them $50 as a change fee to put them on the next morning’s flight. When the fee was refunded they claimed it as a ‘gesture of goodwill’ (my arse!)
• Inconsistency – haphazard application of policies and procedure when providing a solution, and/or different stories each time they contact the airline through different media (web, social media, or face to face).
• Airline credit with strings attached. Instead of getting a refund or cash compensation, consumers are offered an airline credit with conditions. ACCC says these should not be regarded as equivalent when ACL says they are entitled to a refund.
• Additional cost compensation – when a consumer has to rebook a flight for a canceled one, at a higher price with the same or another airline.

The ACCC – says that these cases – ‘may raise a number of concerns under the consumer guarantees regime in the ACL’.  Which I think is a polite, quiet, measured, bureaucratic way of saying:

‘Stop it! or we will stick it to you.’

Can’t wait to see Round 2.

Post Script

The ACCC report also has some sagely advice about what to keep and record if you do have a dispute with an airline:

In the event of a dispute with the airline, consumers should keep the following documents:

• tickets;
• flight itinerary;
• boarding passes;
• receipts of any costs incurred; and
• any communications with the airline.

It is also beneficial to keep detailed notes of any interactions with airline staff either over the phone or in person.

Consider yourselves told.