Air NZ hit with insurance sales warning

Air New Zealand has been issued with a formal warning by the Commerce Commission over automatic opt in for travel insurance with tickets sold online. Photo / Brett Phibbs.

Air New Zealand being warned for opt-out pricing puts other businesses on-notice that the practice isn't acceptable, says Consumer NZ.

Consumer NZ chief executive Sue Chetwin this morning echoed the Commerce Commission's call for companies to stop opt-out pricing.

Air New Zealand has been issued with a formal warning by the commission and has agreed it will stop pre-selecting travel insurance for passengers buying tickets online from next month.

Previously, customers who did not want the insurance had to un-select a box.

The commission believes the use of this sort of "opt-out pricing" could mislead customers into purchasing something they didn't want to.

After hearing the regulator's views, Air New Zealand says it will move to an opt-in basis for selling travel insurance from April.

Although the commission issued a formal warning to the airline, no further action will be taken.

Chetwin congratulated the commission and said her organisation had also received complaints about the practice and "drip pricing" in general.

One instance of this is where the advertised prices for concert tickets don't include booking or admin fees customers then have to pay at the time of purchase.

Commission chairman Mark Berry this morning said the regulator would be targeting other companies it is concerned about.

"We would encourage all businesses selling online to proactively change their behaviour or drop any consideration of introducing this practice.

"We believe Air New Zealand made the right decision and other businesses should follow their example," he said.

Berry said using an opt-in approach avoids any possible breach of the Fair Trading Act.

"Consumers are perfectly capable of deciding for themselves whether they want to pay for additional products or services.

If a company is concerned that its customers need insurance then a suitable approach is to require them to tick 'yes' or 'no' in a mandatory field and leave it in their hands", he said.

In a response to a range of questions, Air New Zealand said:

"Air New Zealand has worked co-operatively with the Commerce Commission with a view to getting an industry wide position in the New Zealand market on an 'opt-in' model for travel insurance.

"The airline will move to this model from April and is pleased to see the Commission calling on all New Zealand businesses to follow suit".