A group of Qantas customers have initiated a class action proceeding against the airline in the Federal Court of Australia this week. The claim relates to travel credits Qantas issued following cancellations due to Covid-19.

In this article, we explore how a consumer issue has grown to become a class action, bringing with it reputational and financial risk, which is a warning to big brands.

While the airline offered credits to all customers whose travel plans were cancelled due to the pandemic, the plaintiffs allege they were entitled to a full cash refund. They claim Qantas breached its own contracts with them by holding onto the cash and issuing credits instead. Because the credits would expire if they weren’t used and had other restrictions, the plaintiffs say Qantas unjustly enriched itself at the expense of its customers.

The plaintiffs further allege that Qantas’ conduct when communicating with customers about their right to a refund was misleading and deceptive under Australian consumer law.

The claim calls for Qantas to refund approximately $400 million, along with a further award for interest and consequential losses suffered by the plaintiffs. It has been filed on an ‘opt-out’ basis, meaning that all qualifying Qantas customers will automatically form part of the claimant pool, unless they say otherwise.

The claim is an important reminder for New Zealand businesses. Under New Zealand law, businesses have a duty not to mislead customers about their right to a refund or the right of the business to retain payments made by the consumer. The terms and conditions at the time of the transaction are the primary way of determining who is entitled to what. Misleading a customer will amount to a breach of the Fair Trading Act 1986.

The claim is also interesting because it shows the development and growth of class action proceedings in this part of the world in recent years (you can read more about recent developments in New Zealand here). Claims such as this one show how a consumer issue that may previously have been dealt with on a simple, individual basis can instead morph into a much wider issue, bringing with it considerable financial and reputational risk.

For more information on consumer issues or class actions, please contact one of our experts.

Special thanks to Claudia Paterson for her assistance with this article.