Ad that landed travel company in hot water
A popular travel agency is under fire over accusations one of its products misled customers.
The Australian Competition and Consumer Commission (ACCC) alleges a MultiFLEX Pass product sold by STA Travel as an airfare add-on misled travellers who were charged hidden commissions and fees - even in cases where there was no difference in the cost of the airfares.
The passes, which start from $49 for a single flight change, allow consumers to change flight dates without incurring any extra fees or charges, outside of the difference in flight costs.
But the ACCC alleges nearly two-thirds of travellers who were sold these passes were met with extra fees.
The ACCC has begun proceedings in the Federal Court against the Swiss travel company, which has 450 stores around the world, seeking penalties, injunctions, costs and other orders against STA Travel.
It alleges STA Travel generated revenue of over $12 million from the sale of MultiFLEX passes since 2011, and nearly two thirds of the consumers who used their MultiFLEX Pass to change flights were charged additional commissions or other fees.
"We were particularly concerned about STA Travel's advertisements because they explicitly said MultiFLEX Pass consumers would avoid fees for date changes," ACCC Commissioner Sarah Court said in a statement.
"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.
"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."
In a statement to news.com.au, STA Travel said it was "assisting the ACCC in its investigation" but was "disappointed" it had taken legal action.
"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," the statement read.
"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."
Additional commissions or other fees totalling more than $1 million were collected by STA Travel since 2011 from consumers using a MultiFLEX Pass to change dates, the ACCC alleges in court documents.
The travel company sold the MultiFLEX Pass at three different values, giving travellers different options when changing flights.
The $49 ONEFLEX Pass allowed for one flight change, the $99 3 Change Pass or MultiFLEX Pass allowed three flight changes, and the $149 Ultimate Change Pass allowed travellers unlimited flight changes.
STA caters mainly for students and young adults, with headquarters in Zurich and London. It claims to be the world's largest travel company for students and young people.