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Highlights
- Webjet (WEB) faces legal action over alleged misleading price practices.
- The ACCC claims hidden fees inflated flight prices and misled consumers.
- Webjet responds, asserting improved transparency in pricing practices.
Webjet (ASX:WEB) is under scrutiny as the Australian Competition and Consumer Commission (ACCC) files legal proceedings against the company, accusing it of breaching consumer law. The allegations center around claims that Webjet advertised cheap airfares without disclosing compulsory service and booking fees, which significantly impacted final prices.
The ACCC alleges that between November 2018 and November 2023, Webjet engaged in deceptive practices by marketing “flights from $X” across its app, website, social media platforms, and email campaigns. According to the ACCC, these prices did not include mandatory service fees that could reach up to $54.90, making it challenging for consumers to understand the true cost of their bookings.
Additionally, the ACCC claims that some emails sent by Webjet confirmed flights that had not been booked, asking customers for further payments to secure those flights. This, the regulator argues, created confusion and misled consumers.
The ACCC's Chair, Gina Cass-Gottlieb, highlighted the significance of transparent pricing, particularly as consumers navigate increasing living costs. She emphasized the need for businesses to adhere to Australian Consumer Law by providing clear pricing and avoiding hidden fees.
In response to the allegations, Webjet released a statement via the ASX, expressing confidence in its pricing transparency and customer satisfaction. The company mentioned that it had already implemented measures to enhance the clarity of fee disclosures. It stated, “Millions have chosen to book through Webjet during the period in question, and we have very rarely received complaints about our fee disclosures.”
Despite Webjet's assurances, the ACCC aims to pursue fines and compensation for affected customers if its claims are upheld in Federal Court.
The timing of this legal action contrasts sharply with recent developments for Webjet. Earlier, the company had reported underlying profits of $9.2 million, which exceeded market expectations. This announcement, along with a $150 million share buyback plan, had pushed Webjet’s share price up by 14%. However, following the news of the ACCC lawsuit, the share price dropped by over 4%, reflecting investor concerns.
This case serves as a reminder of the challenges businesses face in balancing compliance with consumer law and maintaining investor confidence. The ACCC's allegations could have significant implications for Webjet’s operations and reputation.
