Comparison site iSelect must pay an $8.5 million fine after the consumer watchdog found it made misleading claims about electricity prices.

The company admitted to the Federal Court that, between November 2016 and December 2018, its website claimed it would compare all electricity prices from its partners and recommend the best ones.

But iSelect’s back-end did not allow its retail partmers to upload information about all their plans, meaning the plans it recommended may not necessarily have been the best options.

iSelect receives commission when customers sign up to a plan via its website.

The company also admitted “a coding error” caused it to underestimate to consumers the cost of some plans it recommended by up to $140 per quarter.

Chair of the Australian Competition and Consumer Commission (ACCC), Rod Sims, said comparison websites like iSelect need to act responsibly toward their customers.

“It can be complex and confusing for consumers to compare prices and other features of electricity services in a bid to get the best deal for what often is a major household expense,” he said.

“Comparison sites need to make it very clear if their recommendations are influenced or limited by commercial relationships.

“Comparator websites also have a responsibility to ensure that their algorithms are correct, and must implement measures to prevent incorrect recommendations.

“This is particularly so when they generate significant revenue in commissions from those recommendations.”

Earlier this year, the Federal Court ruled in favour of the ACCC in a case it brought against comparison site Trivago after finding the site suggested its algorithm was offering “an impartial, objective and transparent price comparison” when instead it led users to click on its highest-paying advertisers.

Ticket re-seller Viagogo was also slapped with a $7 million fine earlier this month for misrepresenting itself as a primary ticket seller and not disclosing large booking fees upfront.

In a statement to shareholders, iSelect said the ACCC acknowledged there was no evidence that it deliberately mislead consumers and that no injunction was taken out against it.

The company said it will pay the $8.5 million fine in instalments beginning with $1.9 million this financial year.

iSelect took in $120 million in revenue last financial year, $88 million of which came from the “upfront fees” it receives from referring users to a retailer.

The comparison site grossed $34 million profit in 2019/20 – down from $51 million profit the year before.