The consumer watchdog says price compare website iSelect misled customers for two years by recommending energy retailers that paid it higher commissions.
The Australian Competition and Consumer Commission alleged on Friday that since at least November 2016, iSelect claimed consumers using its website would benefit from iSelect comparing all energy plans available from its partner retailers in a specific location.
The ACCC said during this period, the listed comparison site also claimed that it would recommend the most competitive plan to consumers.
"But we claim they were actually favouring some partner retailers over others, such as those on its 'Preferred Partner Program' who were allowed to have more plans available on the iSelect website that excluded and targeted certain consumers," ACCC chair Rod Sims said.
"These preferred retailers paid iSelect higher commissions."
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In a statement to the ASX, iSelect said it took its obligations under Australian Consumer Law very seriously and had processes in place to ensure compliance.
"iSelect has worked cooperatively with ACCC throughout its investigation," the company said.
"As the matter is now before the Federal Court, the company is unable to make any further comment".
iSelect shares slumped at the open of trade on Friday, falling 2.44 per cent to 60 cents at 1043 AEST, continuing a slide of more than 70 per cent from an historic high of $2.20 in July 2017.
The ACCC said it is seeking pecuniary penalties, injunctions, declarations, correctives and costs.
The ACCC alleges that some partner retailers offered cheaper plans that were not made available in iSelect's comparison results.
These cheaper plans were accessible via the Australian government's Energy Made Easy website, which shows all energy plans available in a consumer's area.
"Free commercial comparison sites are often driven by business relationships with retailers that impact their recommendations," Mr Sims said.
"This needs to be very clearly disclosed to consumers so they can make an informed decision about whether to use these services."
