Airlines, hire cars targeted over hidden fees

The ACCC is cracking down on industries playing hide and seek with upfront costs, writes Clive Dorman.

The travel industry is under scrutiny for the second year running as Australia tries to stamp out corporate behaviour that unfairly disadvantages consumers.

The crackdown began last year when the Rudd Government enacted changes to the Trade Practices Act, first proposed by the Howard Government, that outlawed so-called component pricing, where quoted prices have an asterisk that hides undeclared charges.

In July, the government enacted new consumer protection laws that banned unfair contracts. Shortly after, the enforcer, the Australian Competition and Consumer Commission, nominated four industry groups at the top of its watch list: telecommunications, gymnasiums, airlines and hire cars.

Even though they'd previously been put on notice by the ACCC for sharp practices, airlines and hire car companies are again under scrutiny for suspected breaches of the new consumer laws.

The ACCC chairman, Graeme Samuel, says staff have finished reviewing "a large number" of airline consumer contracts. "We're basically saying to the airlines: 'Take a good close look at these contracts, you may need to change them."'

The ACCC says examples of potentially unfair terms in airline contracts include:

- Terms and conditions relating to rescheduled or cancelled flights, particularly in relation to consumer compensation.

- Use of consumer data for purposes other than those directly related to airline travel.

- Application of fees, charges and penalties to consumer transactions.

- Limiting the time period in which consumers can bring a claim for damages.

Samuel says the ACCC is working co-operatively with state consumer affairs tribunals, which have also been swamped with consumer complaints against airlines. He says the ACCC has also received many complaints about consumer contracts in the car hire industry.

"Those standard-form conditions are so voluminous … that no one ever reads them first," Samuel says. "They just sign up to them. The other thing that causes consternation is that you're expecting to pay $61 for the car that you're hiring and suddenly you find that there are all these additions [like insurance excess reduction charges].

"We're concerned about that because consumers can potentially be lured into an arrangement where they don't know the totality of what they're being asked to pay. You can end up paying $110 for a car you thought was going to cost you $61."

The ACCC says issues of concern with car hire companies include:

- Clauses that allow the business, several weeks after the vehicle has been returned, to debit the consumer's credit card for damage without notification.

- Clauses about vehicle damage and specifications on what a consumer is responsible for.

- Limitations on what the consumer can use the vehicle for.

- Failure to adequately disclose insurance related-issues around consumers' liability.

Comments