STA Travel has marketed its MultiFLEX Pass as an airfare add-on that allowed customers to change flights without paying certain, or any, fees, the ACCC said in a public statement.
But the regulator has alleged that such marketing and advertising was misleading or even inaccurate.
According to the ACCC, customers were told that if they charged for making flight changes, these would only be to cover the difference in airfares and applicable taxes, but in practice, the company applied additional charges and hidden commission on top of these cost discrepancies.
In some instances, STA charged customers even when there had been no cost differences, the ACCC alleged.
“Some advertisements, for example, said that the MultiFLEX Pass allowed consumers to purchase date changes ‘upfront’, to ‘prepay’ for date changes, or to make ‘fee free’ or ‘no fee’ date changes,” said ACCC commissioner Sarah Court.
“However, we allege that some consumers were paying STA Travel hundreds of dollars in hidden commissions and other fees that they were never told about.
“Many consumers who thought they were being prudent by purchasing an add-on to avoid high fees were instead worse off.”
Ms Court added: “We were particularly concerned about STA Travel’s advertisements because they explicitly said MultiFLEX Pass consumers would avoid fees for date changes.”
According to the ACCC, STA Travel has bolstered its revenues to the tune of $12 million from the sale of MultiFLEX Passes over the eight years in question. It said that of those customers who made changes to their flight bookings under the scheme, close to two-thirds had been charged additional fees.
“Additional commissions or other fees totalling more than $1 million were collected by STA Travel since 2011 from consumers using a MultiFLEX Pass to make date changes,” the ACCC said.
As part of the Federal Court proceedings, the regulator is pushing for penalties and costs, in addition to injunctions and other orders against the company.
Responding to the ACCC legal action, STA Travel issued a statement expressing its “disappointment”, saying that it had been working with the regulator to address its concerns.
“We have been assisting the ACCC in its investigation, and endeavouring to address and resolve its concerns about how we market and promote our MultiFLEX Pass,” it said.
“Obviously, we are disappointed that the ACCC has now decided to issue legal proceedings against us. As the ACCC’s allegations are now the subject of legal proceedings, it is not appropriate for us to comment on the substance of the allegations or our responses to them at this time.
“However, we wish to emphasise that we will continue to work to further improve how we market and promote our products and services to customers, and to ensure we maintain best practice within the travel industry.”
The company added: “We are committed to ensuring that we operate our business with the utmost integrity. We place great pride in treating all our customers fairly and equitably and providing them with the best quality travel products and services, for the best value.”
It urged customers with any queries regarding the product to contact it directly on 1300 676 264.
“We will also contact affected customers in the future regarding the implications of the ACCC’s proceedings once those proceedings have been resolved,” it said.
According to its website, STA Travel began operating in 1979, and has grown to more than 200 stores worldwide — 59 of which are in Australia — and employs close to 2,000 people.
As of midday on 28 March, the website still marketed its MultiFLEX Pass as “allow[ing] you to change your flights without having to pay the airline or agent fees every time your plans change, saving you hundreds!”