The Australian Competition and Consumer Commission (ACCC) has begun proceedings in the Federal Court against comparison website iSelect for "misleading conduct".
The issues relate to the company's commercial arrangements with retailers, which meant it promoted their plan to consumers, rather than the most compeititve.
The ACCC alleges that since at least November 2016, iSelect has claimed consumers using its website would benefit from iSelect comparing all plans available from its partner retailers in a specific location.
During this period, iSelect also claimed that it would recommend the most competitive plan to consumers.
The ACCC alleges iSelect did not compare all available plans, and did not necessarily recommend the most competitive plan, but rather limited the number of plans it compared based on the commercial arrangement it had with retailers.
iSelect did not disclose this information to consumers who used its service.
“We (the ACCC) claim they were actually favouring some partner retailers over others, such as those on its ‘Preferred Partner Program’ who were allowed to have more plans available on the iSelect website that excluded and targeted certain consumers,” ACCC chair Rod Sims says.
“These preferred retailers paid iSelect higher commissions.”
“Free commercial comparison sites are often driven by business relationships with retailers that impact their recommendations. This needs to be very clearly disclosed to consumers so they can make an informed decision about whether to use these services.”
The ACCC is seeking fines, injunctions, declarations, correctives and costs.
"iSelect knows from speaking to its customers that many Australian households are struggling with high energy prices and are looking for help to find better value. The company believes its energy comparison service strengthens competition, ethically and in accordance with industry practice," a statement from iSelect read.
"As an Australian company, iSelect takes its obligations under Australian Consumer Law very seriously and has processes in place to ensure compliance."
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