Vodafone NZ has paid out $268,231 to customers in a settlement reached with the Commerce Commission in relation to the promotion of the “Broadband Lite” service.
The service allowed customers to access the internet from their mobile phones.
Between July 2009 and September 2011, Vodafone offered its Broadband Lite service free to some customers for three months. After the free period, the service cost $10 per month. The promotion attracted more than 146,000 customers.
If the customer wanted to cancel the service, they needed to inform Vodafone before the free period expired. Vodafone’s terms and conditions advised it would send a text message to customers reminding them of the need to opt-out of the service if they did not wish to be charged.
In late 2011, the Commission said it received complaints from customers who thought they were getting the service for only three months, or did not feel adequately informed of the terms and conditions of the promotion, including how to opt out of the service.
The Commission said it investigated the complaints and decided some customers were not adequately advised of the terms of the service.
The investigation also revealed almost 8000 customers did not receive the promised ‘opt-out’ reminder text and around 3000 customers had cancelled the service but were charged for it because the Broadband Lite add-on was not removed from their accounts.
Following enquiries from the Commission, Vodafone conducted its own investigation and identified and rectified the issues. The commission said Vodafone also upgraded its Fair Trading Act compliance training programme for staff.
In a press statement, Commerce Commission Consumer Manager Stuart Wallace said “in reaching the decision to settle, we took into account the fact that Vodafone put things right as soon as it became aware of the problems."
The case, though, highlights potential problems with ’opt-out’ sales promotions, said Wallace.
“Such promotions require the consumer to take an active step in order to not buy something. Customers can be locked into a deal that they don’t want and maybe did not understand. Unless the ‘opt-out’ condition is very clearly disclosed, these promotions have a high risk of being misleading and in breach of the Fair Trading Act.”