A clear warning has been sent to travel agents against third-line forcing products on customers after Australian Competition and Consumer Commission action against a WA travel company.
Travel agents must ensure their advertising is accurate, ACCC Chairman Professor Allan Fels said today. Cannon Investments Pty Ltd, trading as Travelshop, has acknowledged that it may have breached the third line forcing and consumer protection provisions of the Trade Practices Act 1974.
"Travelshop advertised that prospective passengers had to take out travel insurance from nominated insurance companies, and omitted the cost of insurance from the advertised price of flights," Professor Fels said.
"Travelshop has agreed also to undertake remedial action to stop the conduct and ensure its future advertising meets accepted standards."
ACCC investigations showed Travelshop offered flights to London on condition that prospective passengers also acquired travel insurance from nominated insurance companies. This practice, known as third-line forcing, is prohibited under the Act. Additionally, the prices at which the flights were advertised did not include the additional costs associated with the travel insurance.
"Travelshop has acknowledged that the conduct may have breached the Act and have co-operated fully with the ACCC to resolve the matter by offering a legally enforceable undertaking that it will:
- cease applying conditions to its travel services which may constitute third line forcing and, in future refrain from representing, in advertising or by any other means, that consumers are required to obtain travel insurance from another supplier in relation to any flights or other services being offered by Travelshop; withdraw its current advertising and in future ensure that full details are provided in its advertising of all conditions applicable to any offer being made by it; publish corrective advertising in each newspaper and publication in which the current advertising originally appeared; and institute a trade practices compliance/training program within the company.
"Companies should be aware that by supplying or offering to supply goods and services to consumers on the condition that the buyer takes other goods or services from some other supplier, they may be placing themselves at risk of breaching the Act," Professor Fels said.
"I would remind all businesses that they face penalties of up to $10 million, for companies, or $500,000 for individuals, should they be found to be involved in third line forcing activities. "This matter also highlights the need for companies to be aware of their obligations and responsibilities to consumers to provide those consumers with accurate information to allow them to make an informed choice. "It is essential that advertisements promoting an offer to consumers, particularly one involving significant price reductions, contain sufficient information to ensure consumers are fully informed as to the nature of any conditions that may be applicable to that offer."