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Jetstar to end opt out preselection and Cash in a Flash gives refunds

17 March 2016

The Commerce Commission says Jetstar has given it court enforceable undertakings to end 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.

In 2015 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.

Commission chair Mark Berry says after concluding 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," he says.

In another development, the Commerce Commission says payday lender Cash in a Flash has refunded customers or reduced customer account balances by a total of $122,365 after the Commission warned it was likely to have breached consumer credit laws.

The Credit Contracts and Consumer Finance Act 2003 was amended in June 2015. Key changes include an increase in the amount of information that is required to be disclosed by lenders and that this initial disclosure must be made before the loan is signed.

Under this law, a failure to disclose specific key information to borrowers means lenders are unable to enforce any interest or credit fees they charge during the period of non-compliance.

The Commission says it alerted Cash in a Flash to the fact that its consumer credit contracts were unlikely to comply with the Act because they did not include all of the required key information. 

"This included not providing borrowers with; their registration number as a financial service provider, the details of the Dispute Resolution Scheme it is a member of and the borrower's right to apply for relief on grounds of unforeseen hardship," it says

"Cash in a Flash quickly and voluntarily; refunded the interest and credit fees to customers, withdrew from pursuing all interest and credit fees not yet paid to them, and corrected its disclosure. After considering these actions, the Commission has warned Cash in a Flash about its conduct."

Last updated on the 16th September 2019