Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Jetstar and Virgin Australia found to have engaged in “drip pricing”, (Nov 18, 2015)

By Michael Menzhuber, J.D., LL.M.

Jetstar Airways Pty Ltd. and Virgin Australia Airlines Pty Ltd. have been found by the Australian Federal Court to have contravened the Australian Consumer Law by engaging in misleading and deceptive conduct through “drop pricing,” making false or misleading representations about the price of particular advertised airfares, the Australian Competition and Consumer Commission (ACCC) announced. The proceedings against each of the airlines were brought by the ACCC.

The agency alleged that, in relation to specific advertised airfares, Jetstar and Virgin failed to adequately disclose an additional Booking and Service Fee ($8.50 and $7.70 respectively) that was charged on bookings paid using most credit cards or PayPal (and by debit cards in the case of Virgin. The ACCC alleged that the Booking and Service Fee was disclosed to consumers only when they had moved through a number of stages of the booking process.

Although the ACCC was not able to establish that the alleged false or misleading representations were made by Jetstar on its 2014 website or its promotional emails in 2014, or by Virgin on its website or in its promotional emails of 2014, the court found that false or misleading representations about specific advertised airfares were made: (1) on Jetstar’s website in 2013 and on its mobile site in 2014; and (2) on Virgin’s mobile site in 2014.

This conduct, according to ACCC Chairman Rod Sims, is an example of “drip pricing.” Drip pricing occurs when a headline price is advertised at the beginning of an online purchasing process and additional fees and charges (which may be unavoidable or applied in most transactions) are then incrementally disclosed or “dripped.”

Drip pricing conduct was a priority enforcement area in the ACCC’s 2014 Compliance and Enforcement Policy with the agency addressing identified behavior across a number of industries. It remains a focus of the ACCC’s current priority area of systemic consumer issues in the online marketplace. Consumer information on drip pricing is available at www.accc.gov.au

A hearing on relief will be held on a date to be fixed by the Court. The ACCC is considering the judgment.

News: Advertising ConsumerProtection