Vodafone fined nearly $1m over misleading ads

Vodafone chief marketing officer Greg Campbell

UPDATE Sept 10: Vodafone has been fined $960,000 after pleading guilty to 21 Fair Trading Act charges.

The charges, brought by the Commerce Commission heard by the Auckland District Court, related to a series of promotions between 2006 and 2008. 

They related to claims about the size of Vodafone's network, made in the company's "broadband everywhere" advertising campaign between October 2006 and April 2008; the availability of a $10 free airtime credit for those customers who bought Vodafone's supa-prepay pack between May 2007 and September 2008; and the claimed size of Vodafone's 3G mobile phone network between September 2008 and February 2009.

After sentencing, Vodafone marketing director Greg Campbell said his company accepted the penalty, but denied his company had any intent to deceive. 

“In 2006 and 2008, there was a huge amount happening in the world of technology – the mobile internet was emerging, mobile networks were speeding up and customers were really getting a handle on the benefits of being mobile.  In our genuine attempts to communicate these benefits, we accept that we got some things wrong," Mr Campbell said.

“We did not set out to mislead anyone and we apologise unreservedly. We accept that we didn’t communicate as clearly as we should have done with our customers and pleaded guilty to the FTA charges back in July.

“Unfortunately, we can’t turn back the clock on some things that happened four years ago, but since then we have been focused on ensuring our communication is clear.”

Penalty, not settlement
A Commerce Commission spokeswoman took issue with Vodafone's use of the word "settlement" in a media release this morning.

"This is a court-imposed penalty," she told NBR.

Vodafone entered guilty pleas to 21 charges of the Fair Trading Act in July. 

"Gross carelessness"
In sentencing Vodafone today, Judge Harvey described the company's conduct as “gross carelessness”. He commented in relation to Vodafone’s Broadband Everywhere campaign that it was “clearly false and misleading” and that it had done “significant harm”.

Judge Harvey also noted that in relation to the Supa Prepay charges, Vodafone had not acted on concerns raised with the level of seriousness required, even though it had the technology and resources to do so."

“Prior to the Commission bringing charges against Vodafone in 2009, we had a significant number of public complaints about Vodafone’s various mobile phone and mobile broadband advertising campaigns. At the time, mobile data and phone packages were relatively new to the market," said Commerce Commission competition manager Stuart Wallace.

"Customers have no easy way of verifying the claims being made for products like this. This case reinforces that companies need to be especially careful that their marketing materials for new products are not likely to mislead.”

Record fines
The regulator says Vodafone has now paid a total $1.44 million in fines for charges related to its advertising between 2006 and 2008 - more than any other single defendant under the Fair Trading Act.

In August last year, the company was fined more than $400,000 after pleading guilty to breaching the Fair Trading Act in relation to its Vodafone Live service.

In November, it was fined $81,900 in $1-a-day mobile broadband case.

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45 Comments & Questions

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Maybe Vodafone might also want to drop its new $10 late payment charge for customers on plans. It's like a 20% fee for some loyal subscribers.

Makes you think, could a company that used to be so good and at the front of the market for coolness fall so far from grace.

Good job they have been ripping off customers for ages.

I hope they realise customer service starts with company policy and penny pinching on service fees stinks.
If that’s the best Idea your marketing has to increase its revenue shame on you... shame shame shame..

I hope the fair trading act nails you.. The compliant I personally made to the commerce commission should put the icing on the cake..

Oh and by the way your customer contact centre… I have never been on hold and waited on the phone for so long ever in my life and your supposed to be a communications specialist, go figure…

Regards your previously biggest fan..

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It costs Vodafone "significantly more" than $10 to chase up late payments from their customers.

Only customers who pay their bill late, need to worry about this charge. Telecom & TelstraClear also do the same.

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Thats an internal cost issue - Vodafone need to clean house not penalise their customers.

I can see why they are seen as a rubbish brand in Australia...

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Paying your bills on time is a great way to aviod these charges.

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and shafting someone for being a few days late is a great way to see your customers move to 2Degrees or Telecom

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It is a big shame that Vodafone appear to be following their competitors down the track of broken promises. We have been loyal customers for many years after problems with the previous monopoly and appreciated the way Vodafone rewarded their existing customers and not just new customers, we also were big fans.

However we recently changed to the new kid on the block due to some great deals and better call plans, but have experienced major problems with phones, service and broken promises. We would love to change back to Vodafone, if we could get out of the contract, but would have to think twice if they are following suit. Shame on you from another fan.

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Furthermore, Chorus charge Vodafone & any other ISP for the matter in "advance" for the customers connection to the port at the exchange.

So, having customers who pay their accounts late, impacts on the ISP's Business - introducing this fee, will help to encourage customers to pay their bill on time - after all, they have used the service - the service costs - they should pay on time.

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It's Simple, Pay your bill on time and avoid the $10 fee? Seems pretty black and white to me!

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Exactly! You have to laugh at the moaners who complain about this Late Fee.

Clearly they expect everything should be free & that they can pay their bill at a time that suits them = HELLO!! REALITY CHECK!!

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I understand the rate of Late Payment fees, But for Disconnection fees are way to high for Mobile, i understand if its POTs related, but to disconnect and reconnect a mobile is a click of a button for $50 odd, BS! Yes im a victim and yes its my fault i didn't pay the bill, but to reconnect a mobile, really?

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Lot of villiages missing their idiots today it seems...

how about the national outcry that they've been repeatedly gouged by this company...

How about connecting the dots that VF is the worlds largest Telco (or close to it) and aren't the local good guys....

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Telecom had the Monopoly when Vodafone entered the market, back in 1998.

If it wasn't for Vodafone - Telecom would still be price gauging us, like they did for many years!

Clearly, you have your facts wrong. Vodafone offer very competitive pricing.

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just so we are clear, which village are you from ?

http://en.wikipedia.org/wiki/Vodafone_New_Zealand

According to the Commerce Commission's 2011 Telecommunications Market Annual Report Vodafone's market share was 47.8%, Telecom New Zealand's 37.6% and newcomer Two Degrees Mobile 13.6%. The remainder of the market is made up of MVNO operators who have a combined customer base of only 56,000.
http://en.wikipedia.org/wiki/Vodafone#Financial_results
It is the world's second-largest mobile telecommunications company measured by both subscribers and 2011 revenues (in each case behind China Mobile), and had 439 million subscribers as of December 2011.

Looks like its at LEAST 5 x bigger than Telecom.. Facts anyone?

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You serious? You really think Vodafone's prices are competitive? If you've ever stepped outside NZ and used a mobile service from a different country, you'll realise that the wonderful efforts of 2degrees have only made a tiny dent in the extortionate pricing that NZ has had to suffer as a result of Telecom and Vodafone's "scratch my back" inflated mobile pricing.

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Agree 1,000% - how much money have they funnelled out of the NZ economy, back to their UK head office?

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Lies and dishonesty ultimately catch up with you.

After their previous conviction Vodafone said sorry,we got it wrong,have fixed our systems and it won't happen again.

Well,it has.Their honour,word,integrity,honesty is now shattered.

They just don't deserve customers and should be thrashed/trashed by the CC,and the public.

We don't need you in NZ Vodafone.

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Yeah get out of NZ Voda!!!!

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Spot the national party supporters, u'd sell yr own mothers if u could... Ive been a loyal customer to vodafone for many years, and yes toryman i do pay my bills.
firstly, hey how about giving me a discount for paying on time? secondly, what is ONTIME? The way these guys send out bills, you pay AHEAD. so before my service even starts im paying for it, ok, but u gonna charge me a late fee for a service that i havent even received? third: ok so pay on time, but then use a bit to much on my mobile, go a little over, no prob i pay a bit extra, but hey im not rich, it takes time, not long enough to freak, and in the scheme of things a paltry amount, and i get back to credit in no time. im a good customer. u telling me these scum can increase thier bottom line by charging an extra ten bucks? u do the math, its alot of $$$. SHAME VODAFONE

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Please read your bill. On a 1st July bill you are charged for service from 1st July - 31 July and from calls made in June. But the bill is not due until late July. So in fact you get to use 80% of the service without paying for it. Like the lawyer comment. Let me guess you are going to tell Fair Go?

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ps, they tried to get me wth this buck fifty for a paper bill to. hey im enviromentally friendly, but they taken the p*ss, ps i recycle. Anyways i call vodfone up say i dont wana pay it, they think im a joke, practically laugh at me. MISTAKE. i scan every piece of documentation, nothing indicates that i had to pay a 1.50, i call them again, then get a lawyer mate of mine to giv them a call, they had no leg to stand on. I get my bill in my hands and i dont pay 1.50.

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Cripes, if I had my lawyer write a letter over a $1.50 a month charge it would be 40 years before it paid back. You planning on staying with Vodafone that long?

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I just said get st---ed,I will not pay for a paper bill.And,if you won't send me a bill,how can I pay my account.After much bulls--t they gave in.

They are pathetic no hopers,with daft policies that won't work here.

I don't know why people don't walk back to Telecom or other providers.

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Do you like paper? Do you not have email? Most companies now send their bills via email or make it downloadable from their website. 2 Degrees do not send paper bills at all.

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Email is awesome except when your spam filter blocks a bill or it just doesnt arrive...Paper is at least as permanent as you need it to be and it doesnt need power to be readable

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Snail mail is awesome too if the posties are not dodgy or the kids on the street do not steal your mail.

Most telcos store your bill through their online account tools.

I don't get it switching or getting angry just because you are charged to get a paper bill.

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Another questions why didn't you walk back to Telecom or another provider? Instead you stayed and thought over $1.50 per month?

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Just vote with your wallet - Now that mobile numbers are portable you can go to another telco and keep your number.

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Clearly "Different Perspectives" comes from the Vodafone PR spin machine.However their perspective is a deluded one,out of touch with consumers.They are l--rs and ch--ats.The Courts of NZ have concluded as much.

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Maybe I should change it to "Common Sense" or "Get it right".
I think we do not need that pleb in contributing to the gene pool as they miseed some vital facts

1) About having to pay for charges in advance - I kindly pointed out that they get to use 80% of it before having to pay for it. Not many companies allow for this; does your Supermarket?

2) Being charged $1.5 for a paper bill and said it could not be paid if they do not send one - in todays world it is common to send bills via email so my question of doesn't he know about email is valid? Also what would he say to 2 Degrees who only send out bills via email?

3) Asking why people don't move to Telecom? He doesn't like the $1.50 charge so fights it and stays with Vodafone. His recommendation and actions do not make any sense.

People who complain that their Apple product is too expensive here than compared to the US. Well if you don't like it then don't buy it.

In short I hate stupidity and when people argue with invalid points.

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Pardon? I don't think I ever paid more to Telecom for the privilege of getting some bits of dead tree stuffed in my mail box?? This is morally bankrupt profiteering and you know it

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First I never said Telecom charged for a paper bill.

Times change. Are the banks morally wrong charing a fee to withdrawal money at the branch? Are the power companies dodgy in charging so much in the first place that a 22% discount if the customer pays by DD and chooses the online bill option?

The point is there are options and everyone can make an informed choice. If you're not intelligent to adapt and find alternatives then you will die out.

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Good job, Vodafone have been ripping people off for years, including me!

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Vodafone, your new tvcs suck big time. Who are you trying to connect with?

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like the man says vote with your wallet, there are plenty of alternatives out there nowadays

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actually TV just sucks big time - thank goodness for bradband

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So the Commission laid charges in 2009, and Vodafone waited 3 years to plead guilty. For the time in between, they got to trade on their previous good reputation. And now they can say "this was a long time ago" and "we do things different now".

Well played Vodafone, well played.

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RE: Judge Harvey described the company's conduct as “gross carelessness”

What rubbish! This was blatant deception; nothing less. Vodafone got slapped with a wet..... OK, a dry bus ticket.

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it boggles me just much the voda brand has been embraced by Aucklanders. Just shows how stupid they really are, backing a company that not only hurts our economy but one that has been found guilty of lying to its customers

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I know he wasn't there when it was happening, so it's not his fault, but I find a certain guilty pleasure in the fact that Mr Campbell is the one who has to mop up this mess. Karma......

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So if it wasn't Mr Campbell - who was it ? Surely not that guy that led Pacific Fibre and made us all believe that cheap broadband was on its way...........?

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These childish comments just show there are customers out there who are so petty that I am surprised any telco would want them. Having a mobile phone is optional after all.

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its simple if you are unhappy with your current provider change to another

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I've found Gen-ivery easy, straight and eficient to deal with for XT.

We have had no network service issues. We have had excellent billing service. And they are a Kiwi company.

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I'd love to know who the Gen-i fan is... if you're so happy with the service why would you post as anonymous? Is this the Gen-i SPIN machine getting in on the act too? Shame on you all - the telco industry has very little to be proud of in this country (and elsewhere).

It is time for a serious shake-up in this market.

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Why? You mean making money? Or how about when we kept telco market kept you in touch with your friends and relatives in Christchurch when the earthquake hit... who do you think it was that kept twitter, SMS and voice running???
Or what about the internet connection you are using to vent on right now??? Xero is a business built almost entirely on telco assets.... we brought that to you via our networks....
What about when you catch up with your family on facebook over that home broadband network you love to complain about.....

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