The Australian Competition and Consumer Commission (ACCC) has accused ASX-listed telco TPG of misleading consumers.
The commission announced today that it had launched Federal Court action against the company over a $20 ‘prepayment’ that some TPG customers paid.
The ACCC said that some customers had to fork out a $20 prepayment when signing up to a TPG phone plan. The payment was intended to cover costs not included in a plan cap, such as overseas calls or premium numbers.
The ACCC alleges, however, that the payment acted as a non-refundable fee, with TPG keeping at least $10 when a customer canceled their service.
TPG would automatically top up the prepayment to $20 when it reached $10 or below.
“A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable. It is unacceptable that TPG only disclose this forfeiture in fine print,” ACCC deputy chair Delia Rickard said in a statement.
The ACCC estimates that since March 2013 the company has reaped millions of dollars in the form of prepayments.
The commission also said that a term in TPG’s standard contract that required the prepayment to be forfeited breached the Australian Consumer Law.
“We have and will continue to take action to hold telcos to account for failing to comply with the Australian Consumer Law," Rickard said.
“TPG notes the ACCC’s media release today as to instituting proceedings in the Federal Court of Australia against TPG Internet Pty Ltd,” a statement from TPG said.
“TPG is yet to receive court sealed documents in respect of the announced proceedings. TPG firmly believes that its plan terms and advertising are neither misleading nor unfair and looks forward to dealing with these important issues through the court process.”
The ACCC said it is seeking penalties and compensation for affected consumers.
In December last year, the ACCC announced that that it had accepted a court-enforceable undertaking from TPG regarding the telco’s sale of NBN services.
The agreement with the ACCC related to fibre to the node (FTTN) and fibre to the building (FTTB) NBN services. The ACCC said that TPG, along with other major telcos, was found to have sold FTTN and FTTB services to consumers that had higher wholesale speeds than individual lines were capable of achieving.
“Unfortunately, promoting speed on the NBN has not been simple for any of the service providers including TPG,” TPG COO Craig Levy said after the agreement was announced.
“Due to the multiple NBN technologies available, TPG and other retailers have found themselves in a very difficult position because FTTN and FTTB technologies speeds are dependent on a number of factors including distance, co-existence and copper quality.”
TPG has spent this year rolling out new infrastructure in preparation for launching a new mobile network. The company is currently engaged in a merger process with Vodafone Hutchison Australia, and has indicated that the small cell based infrastructure it has been installing in major cities will complement Vodafone’s existing mobile network.