The Federal Court has found Excite Mobile engaged in false, misleading and unconscionable conduct in its mobile phone services, which included threats to repossess children's toys.
Excite Mobile was found to have acted unconscionably and used “undue coercion” when trying to obtain payments for mobile phone services.
The telco’s directors, Obie Brown and David Samuel, were both found to have been "knowingly concerned" in Excite Mobile’s contraventions of the law, the Australian Competition and Consumer Commission (ACCC) said in a statement.
Fiona Smart, an agent of Excite Mobile, was also found to have been knowingly concerned in false representations made during Excite Mobile’s debt collection.
Consumers across Australia who were affected by Excite Mobile’s misconduct include indigenous communities on the Cape York Peninsula, remote areas in Queensland and Western Australia, and throughout the Northern Territory.
The findings were in relation to sales methods used to induce customers to sign up for 24-month contracts and misleading customers about mobile phone coverage, including indigenous customers who had no coverage.
Brown and Samuel were also found to have created a fictional complaints organisation called the ‘Telecommunications Industry Complaints’ and to have sent 1074 debt collection letters to customers from independent debt collectors that were not independent but sent directly by Excite Mobile.
The telco was found to have made false representations in the letters which stated that a court would order customers to pay an additional 20 per cent charge for failing to pay the debt on time and order the repossession of assets of value, including children’s toys.
Excite Mobile also enforced a ‘day cap’ which only allowed customers to make a two minute call per day, in some cases, before being charged excess fees.
Justice Mansfield found the ‘day cap’ clause, a $75 cooling off fee customers were required to pay and a $195 charge for returning damaged phones, even if only the box was damaged, to be unconscionable.
The judge ruled that the marketing approach of Excite Mobile was “cynically indifferent to the interests of its potential customers, and was unconscionable”.
“The conduct of Excite Mobile was outrageous. Inventing a fictitious complaints handling body to deceive customers and creating a fictitious debt collector to coerce the customer to pay an alleged debt to Excite Mobile is unjustifiable and unacceptable,” Rod Sims, ACCC chairman, said in a statement.
The ACCC will seek injunctions, pecuniary penalties, orders that Brown and Samuel be disqualified from managing a corporation for five years, costs and an order for findings of fact pursuant to section 83 of the Trade practices Act 1974.
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