WEBJET: taken to court by ACCC over alleged deceptive and misleading conduct

The Australian Competition and Consumer Commission (ACCC) is suing WebJet, an online travel company. The ACCC accuses it of advertising flights without including compulsory charges and requesting additional payments after bookings are confirmed.

The Details

The ACCC argues that Webjet’s email booking confirmations were not worth the bits and bytes they were written with. The suit alleges that Webjet sent 382 booking confirmation emails and then requested additional payments, an average of AU$770 per booking. The largest request was for AU$21,764!

Webjets booking confirmations are, therefore, false and misleading to consumers. Customers did not actually acquire tickets at the advertised prices. The online agency promoted prices that did not include fees. The fees were referred to in footnotes, but no clear enough for the ACCC. It’s further accused of not referencing additional fees in some social media advertising, where the fee information was missing entirely.

This conduct by Webjet is alleged to have occurred over nearly a five-year period, including during the height of the pandemic. The dates the ACCC specifies are between November 1, 2018, and June 2023.

Penalties

The ACCC is seeking a range of remedies to be applied to Webjet, including financial penalties, declarations, injunctions, consumer redress, and costs. Webjet states that it is cooperating with the ACCC and has improved the way it prices and discloses applicable fees. On being advised of the legal action, the market penalised Webjet with a 6% fall in its share price, down to AU80¢ per share.

The ACCC has recently succeeded in gaining some significant penalties. Qantas agreed to an AU$120 million settlement of claims brought by the regulator when it misled customers by selling flights that had already been cancelled. AU$20 million of that settlement was to compensate passengers.

More trouble

The company undertook a demerger of the Webjet Group in September this year. The business-to-business hotel aggregator WebBeds was set up as a new company, the Web Travel Group. It is now a separate entity from the travel agency Webjet. The move was designed to unlock shareholder value. The prospectus document did not disclose that the ACCC was taking any action.

The new Web Travel Group was forced to suspend trading when its auditors, Deloitte, advised of changing accounting standards. Unfortunately that was a day before results were due to be announced. Expected to cause an AU$13 million hit to the accounts, it ended in the AU$1 to 2 million range, being a non-cash error, to the investors’ relief.

2PAXfly Takeout

The ACCC has been very active on the travel front. Recently it has moved on Qantas when trying to sell already cancelled flights and now Webjet with alleged misleading pricing.

This is a good move for consumers. The regulator monitors the sector and won’t allow travel companies to play fast and loose with consumer protections.