ACCC says it’s prepared to sue telco execs who approve misleading ads
- 17 September, 2018 11:33
The Australian Competition and Consumer Commission (ACCC) says it is prepared to launch legal actions against telecommunications executives who knowingly sign off on misleading advertisements.
The consumer watchdog said today that the telcos themselves also face higher penalties than in the past
Penalties for breaching the Australian Consumer Law increased at the start of September.
Penalties for individuals increased from $220,000 to $500,000 per breach. Penalties for businesses are now the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of the annual turnover in the preceding 12 months, the ACCC said.
The ACCC says it has put telcos on notice over marketing efforts that may mislead consumers, citing past ads from Telstra, Optus and Vodafone that used the term “unlimited” to promote their mobile data offerings.
Earlier this year Australia’s three mobile carriers launched plans that offered unlimited downloads but in all cases came with significant caveats that saw speeds throttled when a certain monthly quota was hit or for certain uses.
In May, Optus hauled Telstra to court arguing that Australia’s biggest telco had launched a misleading advertising campaign in conjunction with its endless data plan. The Telstra campaign used the slogan “One word from Australia's best mobile network. Unlimited.”
A Federal Court judge agreed with Optus ruling that the ads “falsely convey the representation that Telstra offers a mobile product or service that is unlimited”.
At the time of the ruling in May Vodafone said it was not worried that it would be affected telling Computerworld that it “complies with all relevant advertising codes and initiatives to ensure our advertising contains the appropriate information so customers understand what we are offering”.
However, later that month in a letter to Communications Day Vodafone's consumer business director Ben McIntosh said that although the company believed its marketing of its ‘unlimited’ plans “has been very clear and honest”, “to ensure that we are always going above and beyond, we will be reviewing and updating elements of the advertising campaign to ensure maximum transparency.”
The telco ceased referring to “unlimited” data and now uses the terms “endless” or “data that never ends”.
An Optus spokesperson said it “believes that advertising should be transparent about specific qualifications that apply to any unlimited offer”.
“Optus’ recent ‘Unleashed’ mobile data plan was a limited offer to select customers, which concluded on 30 April 2018,” the spokesperson said.
“Telecommunications companies should be wary of using absolute claims like ‘unlimited’ where that does not give a true picture to consumers of what is being offered,” ACCC chair Rod Sims said.
“We have taken a range of actions against telecommunication companies for misleading consumers. It is about time they showed more respect for their customers and the Australian Consumer Law."
“With much higher penalties now available for breaches of consumer law, I hope they will take their obligations more seriously. From now on consumer law penalties will seriously affect their bottom line, and we will not hesitate to seek the highest possible penalties,” Sims said.
The industry-developed Telecommunications Consumer Protections Code warns that telcos must not “use the term ‘unlimited’ or an equivalent term in an unqualified manner when referring to usage, unless the ordinary use of the service in Australia is genuinely unlimited and not subject to exclusions, including exclusions for various types of calls or usage, or selected parts of the network”.