Jetstar & Virgin taken for a ride over price dripping


Posted By on 18/12/15 at 1:11 PM

This is the second blog in our series on recent ACCC enforcement action, and focuses on recent cases involving price dripping. This has been a priority area for the ACCC for some time, and that special attention is not likely to go away any time soon.

Drip pricing occurs when a headline price is advertised at the beginning of a transaction, and additional charges are then incrementally added (‘dripped’) during the purchasing process, with the true, final price only realised close to, or at the end, of the purchasing process.

The most recent cases involve Jetstar and Virgin, both of which were accused of failing to disclose booking fees to consumers, until they had advanced many stages through the online booking process.

The ACCC alleged that between 2013 and 2014, Jetstar engaged (via its website and mobile site) in misleading and deceptive conduct and making false or misleading representations regarding the price of advertised airfares. The court largely agreed with the ACCC – however, the court found that the ACCC had not proved that these misleading representations were made on the Jetstar website or in promotional emails in 2014. As to Virgin, the court reached a similar conclusion – it found that Virgin made misleading representations via its mobile site in 2014, but the ACCC had not proved that these misrepresentations had been made via its website or promotional emails in the same time period.

Although it failed to prove its entire case, the ACCC has once again demonstrated its continued focus on stamping out the practice. ACCC Chairman, Mr Rod Simms said “The ACCC’s concern with drip pricing has always been to ensure that consumers are not misled and that businesses are not unfairly disadvantaged by misleading practices”.

Penalties will be decided at a further hearing on a date yet to be announced.

The decision comes hot on the heels of the ACCC’s receipt (in October 2015) of court enforceable undertakings from each of Airbnb Ireland (Airbnb) and Vacaciones eDreams, SL (eDreams), both in relation to misleading price representations in breach of the ACL. The ACCC asserted that both companies did not clearly display compulsory service fees, payment fees and cleaning fees on various key booking pages of their websites. In relation to eDreams, the ACCC alleged that it failed to specify a single total price inclusive of all compulsory fees. ACCC Chairman, Mr Rod Sims, said “The law does not prevent traders from charging fees. However, it does require that fees are disclosed clearly to avoid consumers being misled.”

Both Airbnb and eDreams cooperated with the ACCC, and have each given undertakings to improve their pricing practices to ensure that compulsory fees are factored into advertised headline prices, or disclosed early enough in the purchasing process to give consumers appropriate and accurate price information up front.

Naomi Stephens Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More