The consumer watchdog, the Australian Competition and Consumer
Commission (ACCC), is actively targeting
advertising in the telecommunications industry and is cracking down
on any misleading media. With the introduction of mobile phone
plans offering infinite calls and texts, the telecommunications
industry has become a more competitive market than ever before.
Carriers are constantly looking for ways to market their product
or service that will outdo their competitors. However,
aggressive marketers in this industry must take care when promoting
their product to potential customers.
Optus recently took their marketing one step too far and was
fined a total of $178,000 by the ACCC for misleading consumers in
their advertising campaigns during the months of July and August
The fines related to 27 separate offences which each incurred a
fine of $6,600. Optus had advertised a '$49 Max Cap' plan
for mobile phone services both in print and online media. The
ACCC found that the advertisement implied that $49 would be the
maximum price the consumer would be expected to pay under that
particular plan. However, this was not the case, and $49 was
actually the minimum amount the consumer would have to pay under
The ACCC took the view that by the words "Max Cap",
the consumer would be lead to believe that the $49 advertised would
be the maximum the consumer would pay, when in fact $49 was the
minimum and additional charges applied for handset repayments and
Consequently, the ACCC found that Optus had made a false or
misleading representation in relation to the price of goods or
services in breach of the Trade Practices Act 1974 (now
the Competition and Consumer Act 2010).
In addition to the false or misleading representation regarding
the maximum price of the cap, the ACCC also found that the
advertising campaign implied any type of calls could be made under
the plan. Again, this was not the case as there were restrictions
on calls under the plan where certain types of calls were excluded.
As the inclusion of these calls would result in the customer
paying a higher price than $49, this representation was also found
to be false or misleading.
This infringement comes after another misleading advertising
campaign by Optus in February 2011 that was investigated by the
ACCC. The Federal Court in Melbourne found that the
'unlimited' broadband plans Optus were advertising
contained certain limits. Optus were not fined in this case but
were ordered to pay their own legal costs.
The fines send a clear message that the ACCC are serious about
ensuring the telecommunications industry are advertising their
products and services within the boundaries of the consumer
protection legislation and not misleading consumers about the true
price of goods or services.
The crackdown on Optus and the emphasis it has put on
advertising in the telecommunications industry is just one example
of the ACCC exercising its power and informing the industry that it
will not tolerate false and misleading representations. This
infringement should serve as a warning to the retail industry as a
whole about the consequences of making false or misleading
representations about products or services in advertising material
and trade promotions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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