On 26 April 2012, the Australian Competition and Consumer Commission (ACCC) once again demonstrated that the telecommunications industry remains a particular target for its enforcement activities, by issuing TPG Internet Pty Ltd (TPG) with two infringement notices totalling $13,200 for misleading advertising.
As stated in the ACCC's news release: "The ACCC has repeatedly put the telecommunications industry on notice that it will not tolerate misleading advertising, and is concerned that consumers are regularly still not offered transparent and clear information about the price, terms and conditions for their services."
The takeaway for telecommunications service providers is to be aware that fine print will not "cure" misleading advertising: all relevant conditions to a service package should be clear up front. If not, the infringement notice is proving a popular remedy in the ACCC's arsenal.
TPG had advertised on its website and in dealer brochures that consumers who subscribe to its broadband bundle plans of ADSL2+ and VoIP (such as the "ADSL2+ 130GB with VoIP" plan for a monthly charge of $49.99) would receive 500 free minutes of VoIP calls per month.
The actual offer
The "500 free VoIP minutes" offer was subject to a number of terms and conditions, in particular:
- the call must be made to fixed lines in Adelaide, Brisbane, Canberra, Melbourne, Perth or Sydney; and
- a consumer would only receive 500 minutes of free VoIP calls if each and every call made had a minimum duration of 10 minutes.
Although included in the fine print, these conditions were not made clear on the face of TPG's advertising and in one instance the first condition was not disclosed at all.
ACCC has the power to issue infringement notices where it has reasonable grounds to believe a person has contravened certain consumer protection laws. In this instance TPG was issued with 2 infringement notices totalling $13,200.
ACCC chairman Rod Sims stated in the associated news release: "The advertising practice of fine-print qualification is one the ACCC is tired of correcting... The ACCC will take an increasingly aggressive approach to send the message that this kind of misleading advertising will not be tolerated."
TPG has since paid the fine and removed the "500 free VoIP minutes" offer from its website. (The payment of infringement notice penalties is not an admission of a contravention of the Australian Consumer Law, and TPG may still dispute the fine in court.)
Other recent examples of the ACCC's focus on telecommunications
This incident is one of a chain of enforcement actions that the ACCC has taken against telecommunications service providers:
- Action by the ACCC resulted in early April 2012 in the Federal Court making declarations by consent that the company formerly known as Clear Telecoms (Aust) Pty Ltd engaged in both misleading and deceptive conduct and third line forcing. These declarations related to the sale of bundled deals of telecommunication services and equipment rental agreements, where the small businesses being provided with the services were unaware that they were being signed up to a rental contract for the equipment with an unrelated finance company. The third line forcing breach resulted from the tie between the supply of telecommunication services with call credits and the rental of equipment through the finance company.
- In mid-April 2012, FOXTEL was fined $46,200 in relation to its "Christmas Sale" campaign, which advertised a FOXTEL subscription for $55 per month on a 6-month contract. However, the advertisement used an asterisk to point to the fine print which locked the customer into a 12-month contract, such that the remainder 6 months would cost $77 per month.
- In early March 2012, Optus was fined $3.61 million by the Federal Court (a reduction from the original $5.26 million fine) for misleading and deceptive conduct in relation to its "THINK BIGGER" and "SUPERSONIC" broadband plans, which split monthly data allowances into peak and off-peak periods "where broadband speed slows after peak period amount have been reached, irrespective of remaining off-peak amounts". The Court found that Optus' behaviour was "very serious" and "on a grand scale".
- Also in March 2012, Apple was forced to provide an undertaking that it would inform its customers that its new iPad was not compatible with the Australian 4G network, after the ACCC applied to the Federal Court for an urgent injunction to stop Apple from misleading advertising the new iPad. Despite Apple's undertaking, the ACCC has continued court proceedings seeking penalty orders against Apple. The case is currently before the Federal Court.
- In November 2011, TPG's "$29.99 Unlimited ADSL2+" campaign was found by the Federal Court to be false and misleading. The fine print of the offer stated that the offer was only available when purchased with home line rental from TPG at an additional cost of $30 per month, and also involved an upfront setup charge and deposit.
The assistance of Chuanchan Ma, Graduate, in the preparation of this article is noted and greatly appreciated.
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