ACCC v Jetstar Airways Pty Ltd [2019] FCA 797: False or Misleading Representations About Refunds

Thursday 6 June 2019 @ 1.52 p.m. | Legal Research | Trade & Commerce

In ACCC v Jetstar Airways Pty Ltd [2019] FCA 797 (30 May 2019), the Federal Court of Australia (the “Federal Court”) has ordered Jetstar Airways Pty Ltd (“Jetstar”) to pay $1.95 million in penalties for making false or misleading representations about consumer guarantee rights under the Australian Consumer Law (the “ACL”, Schedule 2 of the Competition and Consumer Act 2010 (Cth)). The action against Jetstar was brought by the Australian Competition and Consumer Commission (“ACCC”). 

Background

In December 2018, the ACCC instituted legal proceedings against Jetstar for breaches of sections 18 and 29(1)(m) of the ACL.

The ACCC alleged that between April 2017 and March 2018, Jetstar made false or misleading representations on its website about the rights and remedies available to consumers. Jetstar also made false or misleading statements on its website that some fares were not refundable, and informed consumers they could only get a refund if they purchased a more expensive fare.

Jetstar admitted liability, and the ACCC and Jetstar made joint submissions on penalties to the Federal Court.  Jetstar agreed to pay a $1.95 million penalty, as well as making a contribution to the ACCC’s costs.

The Judgment

In handing down her judgment, Justice Perry noted at para [3]:

“Jetstar has admitted that, as alleged, between 10 April 2017 and 13 March 2018 (the relevant period) it made various representations in connection with the supply or possible supply by it of domestic Australian flight services and international flight services to and from Australia …”

Her Honour also noted at paras [29 and 30] of her judgment:

“The ACCC does not allege that Jetstar deliberately represented to consumers that the Starter Fare and Plus Fares were not refundable in any circumstances. However, the parties agree that as a result of the way in which the No Refund Representations were expressed, some consumers would have understood them as meaning that the Starter Fare and Plus Fares were not refundable … As a consequence, I agree with the parties that, by making the No Refund Representations as explained above, Jetstar made false or misleading representations ...”

The Federal Court also found that Jetstar’s Terms and Conditions breached the ACL by claiming that consumer guarantee rights under the ACL did not apply to Jetstar’s flight services, and that Jetstar’s obligation to provide refunds or replacement flights was limited.

Reaction from the ACCC

Chair of the ACCC, Rod Sims ,commented in the Media Release:

“Jetstar’s representations were false or misleading because all flights come with automatic consumer guarantees that cannot be excluded, restricted or modified, no matter how cheap the fare. If a flight is cancelled or significantly delayed, passengers may be entitled to a refund under the consumer guarantees. All consumers have the right to a remedy, such as a refund, if services are not supplied within a reasonable time … This decision is a warning to all businesses that misleading consumers about their rights breaches the Australian Consumer Law, and doing so may result in multi-million dollar penalties.”

News.com.au reports under that under Australian consumer law, passengers whose flights are cancelled or significantly delayed due to reasons within the airline’s control are entitled to refunds.

Comment from Jetstar

Speaking to news.com.au, a Jetstar spokesperson said:

“We take our obligations under Australian Consumer Law seriously and it was never our intention to mislead customers about the circumstances in which they could claim refunds. We worked closely with the ACCC during its review and in July last year [2018] made changes to our website and our conditions of carriage, to make sure it’s clear when customers are eligible for a refund.”

Jetstar has also has indicated it will offer refunds to customers affected by the misleading statements during the relevant period. It has been reported that other airlines, such as Qantas, Virgin Australia and Tigerair Australia have said they will ensure their policies and practices comply with consumer law.

Acceptance by ACCC of Variation of Undertaking

On 15 May 2019 the ACCC accepted a Variation to the s 87B Undertaking provided to the ACCC by Jetstar (being previously accepted by the ACCC on 14 December 2018). The object of the Undertaking is to address some of the ACCC’s concerns about certain false and misleading representations Jetstar made to consumers about the nature and potential application of their consumer guarantee rights, including about the remedies that consumers may be entitled to in the event of flight delays or cancellations.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

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