Three backpacker travel agents whose advertising breached the new component pricing law and contained misleading representations about the total price of packages have given court enforceable undertakings to the Australian Competition and Consumer Commission.
Businesses that choose to advertise a part of the price of a product or service now must also state the total price of that product or service as a single figure. This does not mean businesses cannot show the various components that make up the price, but it means that if they do, they must also show the total price to be paid in a prominent way.
Wicked Travel, Peter Pan's Adventure Travel and Adventure Travel Bugs published advertisements that did not comply with the new requirements.
ACCC chairman, Graeme Samuel said the ACCC would be vigilant in enforcing the new law and has been monitoring a number of industry sectors to ensure members comply with the new requirements.
"The purpose of this section of the Trade Practices Act 1974 is to make sure that the total cost of a holiday or any other product is immediately clear to consumers," he said.
Some of these businesses advertised tours to the Whitsundays and Fraser Island for as little as $299, when that price did not include mandatory charges that consumers had to pay. Those included things such as insurance, national park fees, the Great Barrier Reef environmental charge and administration fees. The charges increased the total price of the tour to about $450 in some cases.
The ACCC was concerned that advertising these tours for $299 was misleading and designed to gain a competitive advantage by promoting deceptively low prices.
"Previously, an unscrupulous business could potentially get an unfair advantage over its competitors by advertising only part of the total price a consumer would end up paying and hiding the rest in fine print," he said.
The new law means businesses are now competing on a level playing field in advertising to consumers.
"Businesses must be straight-up with their pricing and must not confuse consumers by hiding the total cost of goods or services or by using large price representations that do not include all mandatory costs."
The undertakings require each business to publish corrective notices in various backpacker magazines, on their website, and in stores where the misleading advertisements were published. Corrective notices will also be published in an industry newsletter.
Each business must also implement a trade practices compliance program to ensure this kind of misleading advertising does not occur again.
The ACCC has produced several publications aimed at educating businesses about their obligations under the new law, including one specifically for the travel sector. These can be ordered from the ACCC's Infocentre 1300 302 502 or on the ACCC website.