What if a misstep in handling customer communications cost your business millions?  In a recent landmark decision, the Federal Court of Australia ordered Qantas Airways Limited (Qantas) to pay $100 million in penalties for several missteps that constituted conduct that breached the Australian Consumer Law (ACL). Additionally, Qantas undertook to pay $20 million as part of a remediation program for affected consumers.  

Pursued by the Australian Competition and Consumer Commission (ACCC), this case underscores just how high the stakes are when transparency, accuracy, and timely communication with consumers is not done properly.  In this blog, we explore the court’s decision, its implications for businesses, and the critical lessons every company should consider to preserve their reputation and avoid costly penalties.

Background

The Federal Court found that Qantas engaged in misleading or deceptive conduct, made false or misleading representations, and engaged in conduct liable to mislead the public in relation to more than 82,000 flights scheduled to depart between May 2022 and May 2024.  This conduct was found to contravene sections 18(1), 29(1)(b), 29(1)(g) and 34 of the ACL (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)).

The court specifically found that Qantas had contravened the ACL by:

1. Advertising and selling tickets for flights that were already cancelled; and
2. Failing to notify consumers who had already purchased tickets promptly about the cancellations.

This conduct affected approximately 970,000 consumers, resulting in those consumers experiencing significant inconvenience and notable financial loss.

Penalties and Undertakings

Qantas admitted to these breaches and jointly submitted with the ACCC a proposal for a $100 million penalty, which the court accepted.  This penalty reflects the court’s recognition of the need for a strong deterrent to prevent similar misconduct by other businesses, well above the “acceptable cost of doing business”.

In addition to the penalty, Qantas has undertaken to pay approximately $20 million to affected consumers, intending to compensate those who had purchased tickets for already cancelled flights or to consumers who were rebooked on other flights after their original bookings were cancelled and notice of such cancellation not promptly given.  If at the conclusion of the remediation program (6 May 2025) the amount paid does not reach $20 million, the residual balance will be donated to a charitable organisation approved by the ACCC.

Implications for Businesses and Lessons Learned

As noted by the Federal Court in this case, the ACL provides a framework intended to protect consumers engaging in everyday transactions, operating in good faith with the expectation that they will receive the goods or services they have purchased.

This case serves as a powerful reminder for all businesses of the importance of upholding consumer protection standards and avoiding any conduct that could breach the ACL.  Failure to do so can lead to severe penalties and long-term reputational damage.

Some of the key takeaways of this case include:

• ‍Prioritise Transparency: Businesses must ensure that all information provided to consumers is accurate and up-to-date.  Misleading consumers can lead to substantial legal and financial repercussions.‍
• Timely Consumer Communication: Timely communication with consumers is essential, particularly so when delayed communication could lead to economic loss by consumers.  Such delays can amplify the negative impact on consumers, increasing consumer dissatisfaction and legal risk.‍
• Adhere to Consumer Laws: Compliance with the ACL is non-negotiable.  Businesses must proactively ensure compliance to avoid penalties, reputational damage and to maintain consumer trust.‍
• Systems and Processes: Businesses should have adequate systems and processes in place to promote ACL compliance and avoid breaches.  These should be customised to your business having regard to such considerations as business size and resources.

How We Can Help

If you run a business in Australia, you’ll be affected by the ACL. Whether you work with customers, businesses, provide services or sell goods, you must know how the ACL affects your business.  At Sierra Legal, we understand the complexities and challenges of navigating the ACL.  Our team of experienced lawyers can help ensure that you understand your obligations and options when providing goods and services, while protecting your business interests.

Conclusion

The Federal Court’s decision in the Qantas case reinforces the importance of consumer protection and corporate accountability.  For businesses, this decision highlights the need for transparency, prompt communication, and strict compliance with consumer laws.  Learning from Qantas' experience can help businesses better navigate consumer relations and avoid similar pitfalls.

For more information on how we can assist your business, please contact the team at Sierra Legal.