Jetstar to pay $1.95 million for false or misleading claims on refunds

30 May 2019

The Federal Court has ordered Jetstar Airways Pty Ltd to pay $1.95 million in penalties for making false or misleading representations about consumer guarantee rights under the Australian Consumer Law (ACL).

The Court found that between April 2017 and March 2018, Jetstar made false or misleading representations on its website about the rights and remedies available to consumers under the ACL.

Jetstar made false or misleading statements on its website that some fares were not refundable, and that consumers could only get a refund if they purchased a more expensive fare.

The Court also found that Jetstar’s terms and conditions breached the ACL by claiming that consumer guarantee rights under the ACL did not apply to Jetstar’s flight services, and that Jetstar’s obligation to provide refunds or replacement flights was limited.

“Jetstar’s representations were false or misleading because all flights come with automatic consumer guarantees that cannot be excluded, restricted or modified, no matter how cheap the fare,” ACCC Chair Rod Sims said.

“If a flight is cancelled or significantly delayed, passengers may be entitled to a refund under the consumer guarantees. All consumers have the right to a remedy, such as a refund, if services are not supplied within a reasonable time.”

“Businesses simply cannot make blanket ‘no refunds’ statements, because they can mislead consumers into thinking they can never get a refund under any circumstances," Mr Sims said.

“This decision is a warning to all businesses that misleading consumers about their rights breaches the Australian Consumer Law, and doing so may result in multi-million dollar penalties.”

The ACCC instituted proceedings against Jetstar in December 2018 for breaches of the ACL. At that time, Jetstar admitted liability and the ACCC and Jetstar made joint submissions to the Federal Court that Jetstar should be ordered to pay a $1.95 million penalty, and to make a contribution to the ACCC’s costs.

Jetstar also gave the ACCC a court-enforceable undertaking, committing to amend its policies and practices to ensure that they are consistent with the ACL.

In its undertaking, Jetstar has also committed to reviewing its compliance programs, websites and booking systems to address the ACCC’s concerns, and has already made a number of improvements to its websites and policies.

Jetstar has also undertaken to review consumer complaints concerning flight delays or cancellations during the period 10 April 2017 to 13 March 2018, and will offer refunds or other remedies to consumers that would have been entitled to those remedies.

Background

The ACCC’s enforcement action against Jetstar is part of the ACCC’s efforts to tackle consumer issues in the airlines industry.

In December 2018, as part of its broader work in the airlines industry, the ACCC also accepted a court-enforceable undertaking from each of Qantas, Virgin Australia, and Tigerair. These undertakings are commitments from the airlines to ensure their policies and practices comply with their consumer guarantee obligations under the ACL.

These enforcement outcomes have sought to address the ACCC’s concerns about the airlines industry, which were detailed in the ACCC’s Airlines: Terms and Conditions Report in 2017.

Jetstar’s undertaking can be accessed here: Jetstar Airways Pty Ltd

Tigerair’s undertaking can be accessed here: Tiger Airways Australia Pty Limited

Qantas’ undertaking can be accessed here: Qantas Airways Limited

Virgin Australia’s undertaking can be accessed here: Virgin Australia Airlines Pty Ltd

The ACCC has published new guidance to help consumers understand their rights in relation to flight delays and cancellations, which can be found here: https://www.accc.gov.au/consumers/health-home-transport/flight-delays-cancellations

Release number: 
86/19
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