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Comparison service iSelect has wound up in court after the Australian Competition and Consumer Commission (ACCC) alleged that its energy plan comparison service was misleading.
The watchdog alleges that since 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.
Allegedly, iSelect did not compare all available plans and did not always recommend the most competitive plan, but rather it limited the plans it compared based on the commercial arrangement it had with energy retailers. This was not disclosed to iSelect users.
ACCC chair Rod Sims alleges that iSelect's service was misleading.
"We 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," says Sims.
The ACCC says that some partner retailers even offered cheaper deals that couldn't be found in iSelect's comparison results but were made available elsewhere such as on the government's Energy Made Easy website.
"We were particularly concerned with the issues raised about iSelect's claims because we know consumers go to comparison sites to get the best deal, and for an impartial and objective comparison of complex energy plans," says Sims.
"We allege they were not getting that so they may be paying more for electricity than they should be."
Sims adds that when comparison sites mislead consumers to this extent, it adds confusion to an already complicated market and denies people fair choices on what is often a major household expense.
He stressed the need for absolute transparency when comparison sites endorse partners for commercial gain.
"Free commercial comparison sites are often driven by business relationships with retailers that impact their recommendations," he says.
"This needs to be very clearly disclosed to consumers so they can make an informed decision about whether to use these services."
The ACCC will be seeking pecuniary penalties, injunctions, declarations, correctives and costs against iSelect.
In FY17, more than 9 million Australians visited the iSelect website and more than 6 million recommendations were made across all categories it services.
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