Jetstar Fined $1.95M For misleading Nonrefundability Claims By ACCC

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The Australian Competition & Consumer Commission (ACCC) has taken Qantas subsidiary Jetstar to court over incorrect claims that passengers should buy higher fares in order to receive refunds.

Jetstar

Airlines in Australia are required to refund even nonrefundable fares in case of cancellations and long delays. Jetstar has admitted that it had wrongly told passengers that standard consumer laws wouldn’t apply to air transportation and has agreed to the fine of 1.95 million AUD + ACCC’s expenses.

Here are two press releases issued today by ACCC:

Jetstar, Tigerair, Qantas and Virgin Australia to fix refund policies

Jetstar, Tigerair, Qantas and Virgin Australia have committed to ensuring their refund policies and practices comply with their consumer guarantee obligations under the Australian Consumer Law (ACL).

The ACCC was concerned that each airline had made false or misleading representations on their websites that misled consumers about their rights to refunds and resupply in the event of significant flight delays or cancellations.

The ACCC has accepted court-enforceable undertakings from all four airlines, in which each has committed to reviewing their refund policies, compliance programs, websites and booking systems to address the ACCC’s concerns. As a result of the ACCC’s engagement with the industry, the airlines have already made improvements to their websites, policies and procedures to address the ACCC’s concerns.

Jetstar, Qantas and Virgin Australia will also review consumer complaints made in a specified time period, and offer refunds or other remedies to consumers who were entitled to these remedies originally but did not receive them.

Affected passengers will be contacted by these airlines and offered a remedy in accordance with their rights under the ACL.

All four airlines will also create Australian Consumer Law page on their websites to provide a clear and concise statement of passengers’ consumer guarantee rights and the steps they can take to seek a remedy where the airline’s flights are significantly delayed or cancelled.

“Jetstar, Tigerair, Qantas and Virgin Australia have provided substantial undertakings to the ACCC and in doing so have committed to doing the right thing by their passengers in relation to refunds and other remedies under the consumer guarantees,” ACCC Chair Rod Sims said.

Services such as flights come with automatic consumer guarantees, and these rights cannot be excluded, restricted or modified.

“Airlines cannot make blanket statements that flights are non-refundable or charge consumers a fee to get a refund when they are entitled to one free of charge under the ACL.” Mr Sims said.

If a flight is cancelled or significantly delayed, passengers may be entitled to a refund under the consumer guarantees, which give consumers a right to a remedy if services are not supplied within a reasonable time.

“Passengers will now be offered refunds or other remedies by these airlines when there has been a failure to supply the service within a reasonable time,” Mr Sims said.

Jetstar

Jetstar has admitted that it made representations on its website that some fares were not refundable, and that consumers could only get a refund if they purchased a more expensive fare.

Jetstar has also admitted that its terms and conditions contained representations that consumer guarantees under the ACL did not apply to its flight services, and that Jetstar’s liability in providing remedies to consumers was very limited.

Jetstar will review consumer complaints made between 10 April 2017 to 13 March 2018 following a flight delay or cancellation, and will offer refunds or other remedies to consumers that were entitled to these remedies.

Passengers should contact Jetstar via 13 15 38.

Jetstar’s undertaking can be accessed here: Jetstar Airways Pty Ltd

In addition to accepting a court-enforceable undertaking from Jetstar, the ACCC has also instituted proceedings in the Federal Court against Jetstar to reflect the seriousness of its conduct.

Tigerair

Tigerair has acknowledged the ACCC’s concerns that it could have made representations to consumers that refunds would only be provided if consumers paid a “refund admin fee”, and that consumers could only receive a credit that was only valid for six months as a remedy.

Passengers should contact Tigerair via 1300 174 266 or the Tigerair Customer Support Portal – https://tigerair.com.au/customer-support-portal

(link is external)

Tigerair’s undertaking can be accessed here: Tiger Airways Australia Pty Limited

Qantas

Qantas has acknowledged the ACCC’s concerns that it may have misled consumers into thinking that refunds were not available for its ‘Red e-deal’ fares, and that flights supplied by Qantas were not subject to any statutory guarantees, including those in the Australian Consumer Law.

Qantas will review consumer complaints made between 18 April 2017 to 12 March 2018 following a flight delay or cancellation, and will offer refunds to consumers that should have been entitled to one.

Passengers should contact Qantas via 13 13 13.

Qantas’ undertaking can be accessed here: Qantas Airways Limited

Virgin Australia

Virgin Australia has acknowledged the ACCC’s concerns that it could have made representations to consumers that refunds were not available at any time for its ‘Domestic Getaway’ and ‘International Short-Haul’ fares, and that consumers were limited to receiving a credit that was valid only for 12 months as a remedy.

Virgin Australia will review certain consumer complaints made between 1 January 2017 to 31 March 2018 following a flight delay or cancellation, and will offer refunds to consumers that should have been entitled to one.

Passengers should contact Virgin Australia via 13 67 89

Virgin Australia’s undertaking can be accessed here: Virgin Australia Airlines Pty Ltd

Background:

These undertakings have been provided by the airlines in response to the ACCC’s industry-wide concerns about common consumer issues arising in the airline industry, which were detailed in its report Airlines: Terms & Conditions Report.

The ACCC has published new guidance to help consumers understand their rights in relation to flight delays and cancellations, which can be found here: Flight delays & cancellations

More general information about consumer guarantees under the ACL can be found here: Consumer guarantees.

Notes to editors:

The ACL applies to all Australian domestic flights and international flights departing Australia. It also applies to international flights to Australia where they are booked through an airline’s Australian website.

Not all flight cancellations or delays constitute a failure of consumer guarantees. Factors that determine whether there has been a failure include the length of the delay, the reason for the delay or cancellation, and whether the airline was able to offer a passenger another flight within a reasonable time period.

If a court-enforceable undertaking is breached, the ACCC can take action in the Federal Court.

Jetstar in court for misleading claims on refunds

The ACCC has instituted proceedings against Jetstar Airways Pty Ltd (Jetstar) for making false or misleading representations about consumer guarantee rights under the Australian Consumer Law (ACL).

Jetstar has admitted that it made representations on its website that some fares were not refundable, and that consumers could only get a refund if they purchased a more expensive fare.

“No matter how cheap the fares are, airlines cannot make blanket statements to consumers that flights are non-refundable,” ACCC Chair Rod Sims said.

Jetstar has also admitted that its terms and conditions contained representations that consumer guarantees under the ACL did not apply to its flight services, and that Jetstar’s liability in providing remedies to consumers was limited.

The ACCC and Jetstar have jointly submitted to the Federal Court that Jetstar should be ordered to pay a $1.95 million penalty, and to make a contribution to the ACCC’s costs.

The Federal Court will now decide whether the proposed penalties and other orders sought are appropriate.

Services such as flights come with automatic consumer guarantees, and these rights cannot be excluded, restricted or modified.

If a flight is cancelled or significantly delayed, passengers may be entitled to a refund under the consumer guarantees, which give consumers a right to a remedy if services are not supplied within a reasonable time.

“It’s frustrating for travellers when they have difficulty getting a refund for flights when they are entitled to one. This case is important not only for holding Jetstar to account, but sending a wider message that businesses cannot exclude or limit consumers’ rights under the Australian Consumer Law,” Mr Sims said.

The ACCC has published new guidance to help consumers understand their rights in relation to flight delays and cancellations, which can be found here: Flights delays & cancellations

Background:

The institution of proceedings against Jetstar is part of the ACCC’s response to common consumer issues arising in the airline industry and the ACCC’s concerns. The ACCC detailed its industry-wide concerns in its report Airlines: Terms & Conditions Report.

The ACCC has also separately accepted a court-enforceable undertaking from Jetstar, as well as each of Qantas, Virgin Australia and Tigerair. These undertakings are commitments from the airlines to amend their policies and practices in relation to the Australian Consumer Law consumer guarantees.

More general information about consumer guarantees under the ACL can be found here: Consumer guarantees.

Conclusion

Glad that the ACCC keeps the airlines in Australia honest and issues meaningful fines that actually can have impact on the bottom line unlike the DOT ones in the US (only a fraction for much larger airlines).

It makes no sense trying to cancel non-refundable fares from which you wouldn’t get anything back. You never know if there is a flight or other disruption that allows you to claim the payment back entirely. Happened to me with AirAsia when their plane went down and they allowed all passengers reschedule flights or opt for credits.

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