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Vodafone has paid out $268,231 to customers in a settlement reached with the Commerce Commission following an investigation into the company's broadband advertising.
Between July 2009 and September 2011 the telco offered its Broadband Lite service, which enables customers to access the internet from their mobile phones, free to some customers for a three-month period but after the free period, the service cost $10 per month.
Broadband Lite enables customers to access the internet from their mobile phones.
According to the Commerce Commission, If the customer wanted to cancel the service, they needed to notify Vodafone before the free period expired.
Vodafone’s terms and conditions advised that the telco would send a text message to customers reminding them of the need to opt-out of the service if they did not wish to be charged.
During this promotion the service attracted more than 146,000 customers.
The Commerce Commission began investigating the case in late 2011 after receiving complaints mainly from customers who mistakenly thought they were getting the service for only three months, or who did not feel adequately informed of the terms and conditions of the promotion, including the steps they would have to take to opt-out of the service.
The commission decided that some customers were not adequately advised of the terms applying to the service.
Its investigation also revealed that almost 8,000 customers did not receive the promised ‘opt-out’ reminder text and around 3,000 customers had cancelled the service but were charged for it because the Broadband Lite add-on was not removed from their accounts.
Vodafone has since reviewed and upgraded its Fair Trading Act compliance training programme for all staff.
“In reaching the decision to settle, we took into account the fact that Vodafone put things right as soon as it became aware of the problems. Nonetheless, the case highlights the potential problems with ’opt-out’ sales promotions,” says Commerce Commission consumer manager Stuart Wallace.