Jetstar has given court enforceable undertakings to the Commerce Commission ending its preselection of ‘opt out’ services when selling airline tickets to New Zealand customers online.

The Commission believes the practice of preselecting optional extra services during an online sales process can mislead consumers over the price of the product or service they are buying and can cause them to purchase something they did not intend to. Jetstar has been preselecting luggage, seat selection and travel insurance during its online booking process, at an extra cost to the advertised flight price. Customers needed to ‘opt out’ of these extras if they did not want them.

Last year the Commission called for all New Zealand businesses to end the use of opt out pricing, with Air New Zealand, House of Travel, Dash Tickets, Ticket Direct and Naked Bus all agreeing to do so. Jetstar declined to change its approach at that time.

Chair Dr Mark Berry said that having concluded its investigation into Jetstar, the Commission was prepared to take court proceedings.

“It is pleasing Jetstar has now changed its stance and agreed to stop preselecting optional services on its website, avoiding the need for costly and time-consuming litigation. The Commission has made its position on this issue very clear and traders can be assured we will take enforcement action to stop this type of conduct in the future,” Dr Berry said.

“Consumers are perfectly capable of deciding for themselves whether they want to pay for additional products or services. They do not need companies to make unsolicited purchasing decisions for them. We advise businesses stick to an ‘opt in’ sales approach, which allows consumers to make their own decision and avoids any possibility of breaching the Fair Trading Act.”

Under the formal agreement signed this week, Jetstar have made court enforceable undertakings to change their conduct on their website by 30 April. The undertakings also prevent it from re-introducing opt out charges.

The Commission has issued Jetstar with a formal warning, a copy of which will be available shortly on the Enforcement Response Register.

Background

What are court enforceable undertakings?

Enforceable undertakings are a form of out-of-court negotiated settlement. Where the Commission believes there has been a breach of the Act, the Commission may accept enforceable undertakings. They may include agreements by a person or business to stop doing something, make compensation payments, publish corrective advertising or pay costs to the Commission. If the party does not keep to their agreement the Commission may apply to the Court to enforce the agreement.

How long do the enforceable undertakings remain in place?

The enforceable undertakings agreed in this case will remain in place for 5 years.