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Major bill comparison site’s $8.5 million blunder

Anastasia Santoreneos
·3-min read
Closeup of attractive mid 30's housewife looking at monthly bills that seem to have skyrocketed.
iSelect fined $8.5 million for misleading customers. Source: Getty

Comparison site iSelect has been forced to pay $8.5 million in penalties, after the Federal Court found it misled consumers.

The Court heard that iSelect represented on its website that it would compare all electricity plans offered by its partners and recommend the most suitable plan.

In actual fact, iSelect commercial arrangements were such that electricity retailers could only upload a limited number of plans onto the iSelect system, meaning that 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,” ACCC chair Rod Sims said.

“In fact, about 38 per cent 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.”

The comparison site admitted that between March 2017 and November 2019, it underestimated the cost of some plans it had recommended to nearly 5,000 customers by around $140 per quarter.

“iSelect’s misleading conduct may have caused some consumers to switch electricity providers or plans on the basis of a price that was understated or without being aware that a cheaper plan was available,” Sims said.

iSelect also received commissions from the retailers when those consumers selected a plan via their site or call centre.

Sims said comparison sites had a responsibility to ensure their algorithms were correct, and needed to implement measures to prevent wrong recommendations.

“This is particularly so when they generate significant revenue in commissions from those recommendations,” he said.

“Comparison sites need to make it very clear if their recommendations are influenced or limited by commercial relationships.”

iSelect has since updated its website to reflect the Court’s decision.

Now, there is a disclaimer on the iSelect homepage: “iSelect does not compare all products in the market. The availability of products iSelect compare may change from time to time. Not all products available from iSelect’s providers are compared by iSelect and due to commercial arrangements, area or availability, not all products compared by iSelect will be available to all customers. Some products and special offers may only be available from iSelect’s call centre or website.”

In a statement to the ASX, iSelect CEO Brodie Arnhold said: “I am pleased that we are now able to put this matter, along with a number of other legacy issues, firmly behind us and move forward.”

What comparison site can I trust?

Like Sims said, the Government has its own comparison site called Energy Made Easy. It’s a free government energy price comparison service for households and small businesses in NSW, Queensland, SA, Tasmania and the act.

The Government’s site compares every single plan.

“Energy companies (retailers) that operate in New South Wales, Queensland, South Australia, Tasmania or the Australian Capital Territory are required by law to provide us with data for every plan they make available to most customers,” the site states.

“This may include plans with special conditions that you need to meet, to be able to take up a plan. If this is the case, our plan information documents will list any conditions that the retailer has specified.”

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