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STA Travel accused of false or misleading statements

Publication: 
Editorial Staff
chiefofficersnet

STA Travel, which readers of a certain age will remember as a student-only bucket shop in the 1970s, has mutated but still focuses on the younger (that is those who have yet to reach a certain age) traveller. But, the authorities in Australia say that STA Travel began, in 2011, to market a product that has earned the company some AUD12m but mislead consumers who have paid more than STA Travel said they would. Proceedings have been issued in civil court.

There is nothing clever about the product: it's called MultiFLEX Pass and, in essence, it's pre-paying for flight changes when tickets can't be changed without penalty.

According to the regulator, the Australian Consumer and Competition Commission,
"STA Travel sold three types of MultiFLEX Passes since at least September
2011:

* the ‘ONEFlex Pass’—costing AUD49 and allowing one flight change;
* the ‘3 Change Pass’ or ‘Multiflex Pass’—costing AUD99 and
allowing three flight changes; and
* the ‘Unlimited’ or ‘Ultimate’ Change Pass—costing AUD149 and
allowing unlimited flight changes.

The marketing for these passes said that they were paying "upfront" or "pre-paying" for flight changes or to make "fee free" or "no fee" changes.

The image below is linked from the ACCC's website as a sample of the advertising

The product sits on the border between a gift card and insurance, being somehow both but neither.

But what is was not, in two thirds of cases the ACCC says, an indemnity against charges made when tickets were changed.

Where it all gets a bit muddy is where the ACCC says "“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." Exactly what that means is not spelled out. How were consumers paying "commissions?" The usual situation is that an agent receives commissions from his principal. So, if this was an insurance product, the insurance company would pay STA a commission on sales. Similarly if it were a gift card. But it isn't either and, in the information presently available, there is no hint of an undisclosed principal. Even if the product is underwritten by insurance, that turns STA into the insured, not the purchaser and commissions would not be payable to STA in those circumstances.

The ACCC is seeking penalties, injunctions, costs, and other orders against STA Travel.

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