The ACCC has a new target in its sites: the comparator website industry, warning that it will be keeping a close eye on websites making comparisons between products, services and prices from a range of suppliers.
For the electrical retail industry websites such as Getprice.com.au, comparison.com.au and shopbot.com.au compare product prices of a wide range of products at different stores.
In general these kinds websites are seen as a positive for consumers because they save time and encourage competition, however the ACCC is concerned they could mislead consumers and harm businesses if fair comparisons aren’t made or if information is excluded or over simplified.
“Emerging issues in the online marketplace are an ACCC priority, and players in the comparator website industry are on notice that we are watching. Anyone that comes across concerning conduct within the industry is encouraged to report it to the ACCC,” ACCC deputy chair Delia Rickard said.
Previously EnergyWatch and Compare The Market have been penalised after ACCC investigations for making misleading claims in advertising material.
“Comparator websites can drive competition and deliver significant savings and other benefits to consumers, but any new industry may have a few bad apples,” Rickard said.
The ACCC released a report today into the industry focusing only on comparator websites for telecommunications, private health insurance and energy providers. However there are lessons for the broader industry making comparisons online.
Behind-the-scenes machinations such as undisclosed commercial relationships affecting recommendations to consumers are a concern for the ACCC because a comparator website may earn some or all of its revenue from selling a product directly on the site or generating leads for the retailer or supplier whose products it compares. NB not all of these websites use this business model, for example some are funded by a subscriber base or government.
According to the ACCC reports, these agreements may lead to:
- Inducement: service providers offering to pay more fees/commission to comparator website operators for the operator to promote or recommend the service provider’s products more often or in favour of competitors’ products.
- Preferential treatment: comparator website operators promoting the products of particular service providers based on their commercial relationships rather than based on an individual consumer’s stated preferences.
- Operation of algorithms: the assessment of product options against a consumer’s stated preferences takes place via the use of algorithms. These are often quite sophisticated formulas that are designed to filter the available options down to those that meet the consumer’s needs. Concerns arise where an algorithm is manipulated to operate in a manner that displays results on the basis of commercial relationships or objectives rather than the consumer’s stated preferences.
How much of the market is compared by the comparator website is also a concern, as are rankings outside of price, known as ‘value rankings.’ Largely subjective, the ACCC report states websites should make clear how these rankings were determined as the top ranked product may not necessarily be the best for the individual’s needs.
Finally, the information needs to be accurate. Delays in updating details or inaccurate descriptions could land these sites in hot water.
Early next year, the ACCC will be releasing best practice guidelines to assist comparator website operators and businesses to comply with Australia’s competition and consumer protection laws. The ACCC will also provide consumer guidance on how to check that they are “comparing apples with apples.”