The iSelect Ltd (ASX: ISU) share price looks set to finish the week in the red.
The price comparison website operator's shares sank 4% lower in morning trade to 59 cents, stretching their year to date decline to a disappointing 22%.
Why is the iSelect share price sinking lower today?
Investors have been heading to the exits in their droves after the company advised that the Australian Competition and Consumer Commission (ACCC) has commenced proceedings against it in relation to commercial disclosures and statements that were displayed on its energy comparison site.
Management advised that the company takes its obligations under Australian Consumer Law very seriously and has processes in place to ensure compliance.
It also believes its energy comparison service strengthens competition, ethically and in accordance with industry practice. The matter is now before the Federal Court, so the company is unable to make any further comment until proceedings conclude.
Last month Amaysim Australia Ltd (ASX: AYS) advised that proceedings brought by the ACCC against its Click Energy business had been resolved.
These proceedings were in relation to statements about discounts and savings of its energy products that the ACCC considered to have contravened the false or misleading conduct provisions of the Australian Consumer Law.
Click Energy ultimately agreed that it contravened Australian Consumer Law and the Federal Court ordered it to pay a penalty of $900,000.
If iSelect is given a similar fine then it wouldn't be the end of the world, but it would be a bit of a blow to its bottom line in FY 2019.
Should you invest?
I'm not convinced that iSelect is over the worst of its issues yet, so I intend to stay clear of its shares for the time being.
In the meantime, I would sooner buy small cap tech share such as Citadel Group Ltd (ASX: CGL). I believe it has strong growth potential and is trading at an attractive level right now.
