Slingshot - the consumer division of ISP CallPlus - has been fined $250,000 after pleading guilty in the Auckland District Court today to 50 charges it faced under the Fair Trading Act for "slamming", or moving customers to its service without their consent.
"We have accepted the findings of the Commerce Commission and the fine that was issued today," CallPlus CEO Mark Callander tells NBR.
"We have cooperated fully with the Commerce Commission throughout this process and we have taken this matter very seriously. Most importantly, we have apologised to the 27 customers who were impacted by the actions of the third party telemarketing company, Power Marketing."
There's no sympathy from the Telecom camp.
Retail CEO Chris Quin says although the convictions related to 27 customer cases, Telecom received 679 customer complaints regarding Callplus/Slingshot between 2008 and 2011.
In 2010, Slingshot represented 67% of complaints escalated to Telecom’s investigating team.
Analysis of complaints showed a range of concerning practices. These included not giving consent for their services to be transferred to Callplus/Slingshot, thinking they were talking to a Telecom representative, or being told it was mandatory to change from Telecom to Callplus/Slingshot.
‘"We believe that these complaints are likely to represent a small proportion of the total number of affected customers, as others might not have complained because they were unwilling to go through the hassle of transferring their services back to Telecom, or they simply did not understand why they started receiving bills from Slingshot,” Mr Quin says.
The Retail boss says the Callplus/Slingshot practices had cost Telecom in terms of lost customer revenue, resources spent on investigating the issue, and legal expenses.
Mr Quin tells NBR Telecom will not pursue its own legal action.
He says the damage caused by Slingshot's slamming is hard to put an exact number on but "it was enough for us to bring this action [complaining to the Commission]."
Between 2009 and 2011, the Commission received over 100 complaints alleging that telemarketers acting on behalf of Slingshot had breached the Fair Trading Act by either misleading customers about the service provided or by switching customers to Slingshot’s services without their consent, known in this industry as “slamming”.
The Commission’s investigation established that Slingshot exacerbated this behaviour by then vigorously pursuing payment when customers refused to pay for a service they had not agreed to acquire. In some cases Slingshot referred customers to debt collection agencies and continued demands for payment despite consumers receiving assurances from other Slingshot staff that the matter had been resolved and no further action was required.
On sentencing, Judge Russell Collins said the actions of Slingshot had a “real and disturbing impact on customers in the market place.” The Judge also said this case was an “excellent illustration for the need for the Fair Trading Act” and that the “conduct encouraged more barriers to competition.”
Commerce Commission Consumer Manager Stuart Wallace said Slingshot’s actions in this case were very disappointing.
“This is unacceptable conduct by any trader, let alone one of Slingshot’s prominence” said Mr Wallace. “A particularly concerning aspect of this offending is that Slingshot was warned by the Commission for similar conduct in December 2009.”
The Commission has also laid charges against Power Marketing Limited, who acted as Slingshot’s marketing agent. Power Marketing Limited is defending some of the charges faced, so no further comment can be made it this time.