Telstra has paid $102,000 in penalty for an ad that allegedly misrepresented the price of the Apple iPhone 6.
The Australian Competition and Consumer Commission (ACCC) issued the penalty for an A3 advertisement in The Age on 27 September. The ACC determined that Telstra had made a false or misleading representation about the price of goods and services in violation of the Australian Consumer Law.
The ad for Telstra’s iPhone 6 and phone plan bundle prominently displayed a price of $70 per month, but in reality consumers had to pay an additional $11 monthly to pay off the cost of the iPhone 6. The ad had only disclosed this additional cost in fine print.
“Consumers should be able to understand the true cost of an advertised product so they can make informed purchasing decisions,” ACCC Chairman Rod Sims said.
“Businesses must be careful about using attention grabbing headline prices to ensure that their advertisements do not mislead consumers about the actual price they will have to pay. This is especially the case for bundled goods and services like phones and plans,” he said.
“Advertising that is clear allows consumers to make informed purchasing decisions and improves competition as it gives other businesses the opportunity to compete fairly.”
Telstra disagreed with the infringement notice but agreed to pay the fine, a Telstra spokesman said. Telstra hopes future issues of this nature can be worked out without formal enforcement measures, he added.
"We were surprised to receive the infringement notice, as our ads prominently stated the mobile plan cost, the handset cost and the total minimum cost as legally required, and were in line with the way many others in the industry advertise mobile plans with handsets."
The spokesman added that the fine print wasn't very small because it was displayed in a full newspaper page.
"Even though we are strongly of the view our ads complied with the law, we have paid the notice. In addition, we’ve made some changes to our advertising to make it even clearer to customers what they will pay each month for a plan and handset."
Telco advertising in Australia is regulated under two consumer protection regimes – the Australian Consumer Law and the Telecommunications Consumer Protection (TCP) code, a voluntary industry code that is enforced by the Australian Communications and Media Authority (ACMA).
The Communications Alliance and the Australian Mobile Telecommunications Assocation (AMTA) are seeking to review the TCP code to eliminate overlap with the ACL through the government’s red tape reduction initiative.