Australia Post and its subsidiary StarTrack have committed to pay about $2.9 million in compensation for lost or damaged parcels.

The failure affected about 10,500 business contract customers and fewer than 1000 recipients of StarTrack deliveries, according to the Australian Competition and Consumer Commission (ACCC).

The consumer watchdog said that the two companies admitted they likely committed misleading or deceptive practices when they declined compensation requests and incorrectly told some business customers that they were not eligible for compensation for lost or damaged goods from October 26, 2018 to October 31 last year.

“The failure by Australia Post Group to provide business customers with the remedies they were entitled to is extremely concerning, but we acknowledge that Australia Post self-reported this conduct to the ACCC,” said ACCC commissioner Liza Carver.

“We are pleased that Australia Post Group has undertaken to provide compensation for this error and to put systems in place to ensure similar errors are not made in the future.”

Under the Australian Consumer Law, consumers may request a remedy if a product or service received is not of acceptable quality or is not performed with due care and skill, fit for purpose or delivered within a reasonable period.

The law exempted certain transportation services for the purpose of a business until the amendment in October 2018, which guaranteed rights to the delivery of goods to a recipient who is not carrying on a business linked to the goods.

“Business contract customers who sent goods to customers without a business purpose which were lost or damaged in transit with the Australia Post Group have been entitled, and continue to be entitled, to consumer guarantee rights,” said Carver.

The mailing service provider reported the breach to the ACCC last May.