Comparator Website Guidelines Released by ACCC

Tuesday 4 August 2015 @ 9.01 a.m. | Legal Research | Trade & Commerce

The Australian Competition and Consumer Commission (the ACCC) has released information for Consumer and Industry on the operation and use of comparator websites.

Background

The ACCC had previously secured over $2 million in penalties against comparator website EnergyWatch for misleading advertising related to representations about the nature of the Energy Watch service and the savings consumers would make by switching energy retailers through the Energy Watch service.

Compare The Market Pty Ltd paid a penalty of $10,200 following the issue of an infringement notice by the ACCC in relation to claims made in recent advertising promoting Compare the Market’s health insurance comparison service.

ACCC Deputy Chair, Delia Rickard said:

“The consumer guidance offers tips to help consumers get the best outcomes when using comparator websites. The industry guidance sets out the standards that the ACCC expects comparator websites to meet. Comparator websites can drive competition and assist consumers to make informed purchasing decisions when comparing what are often quite complex products. However, the ACCC is concerned that poor conduct by some industry participants can mislead consumers.”

Purpose of the Guides

The ACCC developed the guide to assist operators and suppliers when making decisions about all aspects of comparator services, including in advertising and marketing.

In 2014, the ACCC reviewed the comparator website industry in Australia, recognising the increasingly important role of online markets to the Australian economy and found that comparator websites can provide important benefits to both consumers and businesses, including facilitating greater competition, choice, convenience, quality, and offering time and cost savings. However, concern remains that poor conduct by some industry participants may undermine these benefits.

The ACCC then released a report The Comparator Website Industry in Australia. The report set out the ACCC’s concerns over a lack of transparency in regards to the:

  • extent of the comparison service, including market coverage;
  • savings achieved by using the comparison service;
  • comparison services being unbiased, impartial or independent;
  • value rankings;
  • undisclosed commercial relationships affecting recommendations to consumers; and
  • content and quality assurance of product information.

The ACCC also identified a number of concerns around the industry’s compliance with the Australian Consumer Law (the ACL) contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Act). In particular, there were a number of areas where the industry was potentially engaging in misleading or deceptive conduct. All operators and suppliers in the comparator website industry have a legal obligation not to engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

This guidance is intended to encourage an industry-wide consideration of business practices to ensure compliance with the Act, and to promote fair trading and better consumer experiences in this growing sector.

The Consumer Guide

When you shop online, you have the same rights as you have when you buy in a store. You have the right to expect:

  • truthful and accurate representations, statements or claims;
  • all the necessary and important information that you need; and
  • transparent disclosure of commercial relationships.

Comparator website operators may be considered misleading if they omit to display (or incorrectly display) relevant information and are not transparent about commercial relationships.

The Consumer Guidance sets out tips that can assist consumers to understand and benefit from comparator websites, including:

  • Making sure they know what is being compared;
  • Identify the site owner;
  • Keep a record of any telephone calls;
  • Understanding commercial relationships; and
  • Know what their needs are.

The Industry Guide

The industry guidance is targeted at the operators of comparator websites and businesses whose products are listed on them.

The ACCC has developed the Guide to assist operators and suppliers when making decisions about all aspects of comparator services, including in advertising and marketing. The guidance is intended to encourage an industry-wide consideration of business practices to ensure compliance with the Act and to promote fair trading and better consumer experiences in this growing sector.

The guidance sets out how industry can comply with competition and consumer protection laws, including setting out three guiding principles of:

  • Facilitating honest, like for like comparisons;
  • Being transparent about commercial relationships; and
  • Clearly disclosing who and what is being compared.

Ms Rickard said:

“Operators should carefully read this guidance as there will be no excuse for non-compliance with the Australian Consumer Law, and the ACCC will continue to take action where necessary.”

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