If you were tempted into the cinemas in 2016 by Finding Dory or the cinematic adaption of Roald Dahl’s The BFG, you may have booked your tickets online. If you booked tickets for a film showing at Palace Cinemas, you will have paid a $1.30 booking fee, which wouldn’t have been shown to you until you clicked ‘proceed’ and continued with the booking. Palace Cinemas was recently found to have engaged in misleading and deceptive conduct by the ACCC for its failure to reveal the booking fee, part of the ACCC’s review of cinema industry practices.

Misleading and Deceptive Conduct

Misleading and deceptive conduct is defined by section 18 of the Australian Consumer Law (ACL), which forms Schedule 2 of the Competition and Consumer Act 2010 (Cth). A person must not, in trade or commerce (i.e. in business), engage in conduct that is misleading or deceptive or is likely to mislead and deceive (section 18(1)). The ACL was brought into law in 2011, consolidating the 13 different legislative instruments which regulated consumer law federally and in different states and territories. The different regimes in different jurisdictions added unnecessary complexity, duplication and inconsistency to the detriment of business and consumers; a consolidated national law was badly needed by 2011. The ACL’s misleading and deceptive conduct provisions are a key aspect of the consumer law.

Fees in Ticket Bookings

Palace Cinema’s online booking process led consumers through a stepped process. Throughout the process, the ticket price was displayed but omitted the $1.30 booking fee, leading consumers to believe they only needed to pay the stated ticket price, until the very end when the total cost was disclosed.

By this time, many consumers had already gone to the effort of filling in the online form, and the effort expended meant that they were likely to pay the booking fee, whereas if it was disclosed from the beginning, consumers may have decided to book elsewhere.

This practice misled consumers into believing they did not need to pay a booking fee. The ACCC fined Palace Cinemas $10,800. Benjamin Zeccolo, CEO of Palace Cinemas, called the fine ‘unfair’, however the Chairman of the ACCC said that Hoyts and Village cinemas had reacted quickly to the ACCC’s concerns. He said Palace Cinemas on the other hand, was slow to act and claims that its software was playing up did not change the fact that it was breaching the ACL.

Jetstar and Virgin Booking Fee Claims

Jetstar and Virgin went to court over similar practices in 2015. Both Jetstar and Virgin aggressively and widely advertised cheap ticket prices. Booking fees ($8.50 for Jetstar and $7.50 for Virgin) were only disclosed at the very end of the booking process.

The pricing advertised by the airlines attracted consumers who would not have been interested otherwise. Consumers paid the extra booking fees, rather than expending the effort in finding another airline.

Foster J described Virgin and Jetstar’s practice:

Unless the full price is clearly displayed, a consumer would be drawn, like a moth to flame, to a transaction they would not otherwise have found to be appealing and grudgingly pay the additional costs rather than go to the trouble of withdrawing from the transaction and looking elsewhere.’

Avoid Hiding Booking Fees

Businesses should consider whether their advertising is misleading or deceptive. It’s important to consider the impression that a piece of advertising might convey – does the advertising convey an overall impression that is false or inaccurate?

E.g. if you advertise something as free, this creates keen interest in consumers and raises the expectation that the product is completely free; a reasonable expectation.

If you advertise a product as free, such as “10% off a product”, but then raise the price of the product, then the offer is not exactly free. This would be misleading and deceptive conduct.

Key Takeaways

Palace Cinema’s failure to disclose its online booking fee until the final stage of its stepped booking process was found by the ACCC to be misleading and deceptive conduct. Palace received a $10,800 fine. Palace’s failure to disclose the booking fee meant consumers were attracted by the cheap movie ticket price and begrudgingly paid the booking fee, when they may have looked elsewhere if the fee was disclosed upfront. Businesses should consider whether any of their advertising creates an impression that is false or inaccurate, to avoid breaching section 18 of the ACL.

Chloe Sevil

Next Steps

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