Insurance comparison website iSelect also compares utilities – and it appears that it has not been comparing too fairly as it was penalised millions for misleading Australian consumers.
The Federal Court has ordered iSelect to pay $8.5 million in penalties for making misleading representations about its electricity comparison service.
The price comparison site admitted that, from November 2016 to December 2018, it represented on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan.
However, the truth is that iSelect’s commercial arrangements with its partner electricity retailers restricted the number of electricity plans they could upload on to the site’s systems. As a result, the recommended plans were not necessarily the most suitable or competitive.
“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers. In fact, about 38% 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,” said Australian Competition & Consumer Commission Chair Rod Sims.
It gets worse from here as iSelect also failed to adequately disclose that cheaper plans from its preferred retail partners were only available via its call centre rather than its online comparison service.
Moreover, between March 2017 and November 2019, iSelect misrepresented the price of some of the plans recommended to nearly 5,000 people due to an error on its website and call centre code. As a result, the site quoted a total price for some plans which underestimated the cost by up to $140 per quarter.
“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,” Sims said.
