One Big Switch Pays Penalties to ACCC for False and Misleading Representations

Friday 27 July 2018 @ 10.44 a.m. | Legal Research | Trade & Commerce

According to a recent Media Release from the Australian Competition and Consumer Commission ("the ACCC") Revtech Media, the company behind group discount website One Big Switch, has paid penalties of $25,200 after the ACCC issued two Infringement Notices for alleged false and misleading energy price representations.

Background

The alleged offences took place between July and November 2017, where One Big Switch advertised a 27 percent discount for consumers in South-East Queensland who switched to Click Energy’s “Big Switch Up” offer.

One Big Switch also advertised that consumers would save up to $372 a year if they switched to Click Energy. The ACCC alleged that the advertised savings were false or misleading because they were based on a comparison between Click Energy’s discounted market offer and the undiscounted “standing” offers of EnergyAustralia, Origin and AGL.

The discount on offer from One Big Switch was based on rates that were higher than Click Energy's standard rates. The rates were increased then a discount was applied.

Reaction and Comment from the ACCC

The ACCC also alleged that One Big Switch did not know what a particular customer was paying under their current plan with another retailer, and so did not have reasonable grounds to estimate the savings which could be achieved by switching.

ACCC Chair Rod Sims said of this matter:

“The ACCC alleged that this representation was false or misleading because calculation of the 27 percent discount was based on rates under the Big Switch Up offer which were higher than Click Energy’s ‘standing’ offer rates. The actual savings for some consumers were much less than the amount advertised by One Big Switch. We allege that as a result of these claims, consumers were misled into assuming they were getting bigger discounts and savings than they would actually receive ...”

Speaking to the ABC, Mr Sims explained that many customers of Click's competitors were getting much better pricing, making any potential savings smaller:

"So whether you saved $372 or not depended on whether or not you were stuck on a standing offer of one of those other players — you'd save a lot less if you were on a market offer. When you have a discount being advertised and it's not off the standing offer of that company, it's off an inflated offer, before you even get to calculate the discount, I think that's pretty bad and misleading."

Comment from RevTech

In a statement made to the ABC, RevTech Media said it:

“… accepted the umpire's decision and has, since November 2017, required all energy offers to be expressed as a headline discount off the retailer's standing offer rates. Revtech Media looks forward to regulators and governments developing a simple, common price benchmarking system that will allow consumers to easily compare the price of energy offers — which they cannot currently do. At RevTech Media, before we promote any offer to members, we undertake a detailed analysis of the combined effect of the discounts and the underlying rates to ensure the offers are highly competitive for on-time payers. We've undertaken this expert analysis for all offers we have presented to members — including any Click Energy offers — and we stand by their price competitiveness in the market at the time."

It is to be noted that the payment of a penalty specified in an Infringement Notice is not an admission of a contravention of the Competition and Consumer Act 2010 (Cth) (the “Act”) as the ACCC can issue an Infringement Notice where it has reasonable grounds to believe a person has contravened certain provisions of the Act or the Australian Consumer Law (the “ACL”).

The Retail Electricity Pricing Inquiry

In March 2017, the Retail Electricity Pricing Inquiry (the “Inquiry”) commenced and started by identifying the root causes of high electricity prices across the entire electricity supply chain. The final report from the Inquiry examines the many causes of problems in the electricity market and sets out 56 recommendations that will bring down prices and restore consumer confidence and Australia’s competitive advantage.

On 11 July 2018, the ACCC released its Final Report into the Inquiry, with its aim to significantly improve electricity affordability for Australian consumers and businesses, with the Report noting at page 234 that:

“… the regulation relating to standing offers and standard retail contracts should be abolished and replaced with an obligation to supply in accordance with an offer (the ‘default offer’) that is priced no higher than a level determined by the AER …”

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