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Australian airline Jetstar has been forced to pay $1.95 million in penalties for making misleading representations about refunds and customer rights on its website.
The Federal Court found that the Qantas (ASX: QAN) subsidiary made false or misleading statements about customer rights on its website between April 2017 and March 2018.
Specifically, Jetstar made 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 consumer law by claiming that consumer guarantee rights 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," says Australian Competition and Consumer Commission (ACCC) chair Rod Sims.
"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."
Proceedings were brought against Jetstar by the ACCC in December 2018, and the airline admitted liability at the time.
In addition to the $1.95 million penalty the airline gave the ACCC a court-enforceable undertaking, committing to amend its policies and practices to ensure that they are consistent with consumer law. This involves reviewing its compliance programs, websites, and booking systems to comply with the ACCC's concerns.
Shares in Qantas are down 1.18 per cent to $5.44 per share at 12.30pm AEST.
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