ComCom files charges against Spark for alleged over-billing, misleading customers

Spark managing director Simon Moutter says each of the three charges stem from "genuine mistakes."

The Commerce Commission is filing charges against Spark over three alleged breaches of the Fair Trading Act.

The watchdog alleges the telco over-billed some broadband customers, misled another group about a promotion, and continued to charge thousands of others for up to a month after they had left the company.

The commission says its charges relate to:

• customers being overcharged for broadband data in 2015 when a fault in Spark’s broadband network misrecorded customer data usage.

• letters offering new customers a $100 account credit for subscribing to a particular broadband plan but failed to mention the offer could only be redeemed by phoning Spark. The offers allegedly created the impression that customers signing up online would receive the credit, when they would not, the ComCom claims

• over-billing ex-customers; from 2 June 2014, Spark’s terms and conditions said charges would stop 30 days after the customer gave notice to terminate their contract. However, the commission alleges that the customer’s final bill included charges for the entire next monthly billing period regardless of when the Spark service stopped

Changes blamed
“These were all system-based errors caused by genuine mistakes, with no malicious intent involved on the part of Spark. That being said, we are deeply disappointed that these issues have affected our customers,” Spark managing director Simon Moutter says.

“As a business, we’ve been through a massive amount of change over the last few years and this has significantly improved our customer service delivery. These errors were, for the most part, an unfortunate and unintended consequence of some of the change we’ve been through and we regret that they occurred,” Mr Moutter says.

Spark is in the process of an "agile" restructure, which has seen an emphasis on automation and self-managing teams. The process includes new contracts and an as-yet-unquantified number of layoffs.

$1.8m in penalties in the offing
The telco has yet to decide how it will plead.

Mr Moutter says his company was in extended negotiations with the ComCom and has tried to avoid the stoush going to court. However, its make-good efforts, which recently extended to a marketing campaign to reach and refund those affected by the 30-day billing issue, were ultimately not enough to stave off the regulator. A settlement offer was rejected.

Spark says the commission has yet to say if it will seek the maximum penalty for each alleged infringement (a company can be fined u$600,000 for each breach of the Fair Trading Act or a total $1.8 million in this case).

Trying to make good
On June 29, Spark said only about 20,000 of the 135,000 ex-customers had claimed refunds. A spokeswoman told NBR that efforts to contact ex-customers and refund the money (which ranges from $1 to more than $100 per customer) pre-dated an approach from the commission.

The telco says it has so far returned $1.1m. It won't say how much is involved in total but adds that 90% of those affected are owed less than $100. 

The telco says it has also made donations in 2017 to various charities totalling approximately $268,000, in recognition of the interest it was likely to earn on unclaimed credit balances arising from the 30-day billing issue.

Spark says the 2015 equipment fault issue was resolved for all 5325 affected customers, with credits or compensation totalling $216,937, as has the 2016 ‘welcome credit’ issue for all 463 affected customers with credits totalling $46,300.

The company says the charges don't change its guidance. Shares [NZX:SPK] were flat at $3.85 in late morning trading.

Vodafone also in the crosshairs
Separately, the ComCom told NBR  last Thursday that it is assessing several complaints about a new $5 admin fee introduced by Vodafone in March. The fee slowly depleted credit on unused accounts. 

The watchdog and the telco are already at loggerheads over Vodafone's "Fibre X" product, which the ComCom alleges is being misrepresented as UFB fibre. Vodafone denies the charge. The case has yet to go to court.


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9 Comments & Questions

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Really? Is this this all the CC has to do? If the commission only has trivial things like this to do, then what's the point of having them.

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A visitor from Mars might take the view that although Spark offered to settle, and made what seem to be quite energetic efforts to refund affected customers, the ComCom thought it was worth pushing ahead for the public embarrassment factor — which could serve as a deterrent to Spark and other telcos indulging in similar practices again (though noting Spark has blamed things on technical errors).

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The 'technical errors' excuse is garbage, much more a pointer to a culture which treats customers as ATM's to extract cash from. Had a Spark mobile for 5 months earlier this year, the plan stated quite clearly that Spotify premium was 'free' and the $14.99 saving I effectively got was what attracted me to the plan. Signed up over December, completed the registration process for 'free' Spotify. My own paid subscription ran out on December 24th, Christmas Day - no free Spotify pemium from Spark. Couldn't get hold of anyone until the 3rd of Jan so paid for premium myself and asked for a refund of the contractually committed service. Here is the response from Spark customer services - still have the email.

"Spark’s offer for the Spotify Premium Subscription is a value added optional extra on top of your $39.99 Rollover Plan. It isn’t part of the plan that you are on. It is an optional extra that we offer to customers on our Pay Monthly plans to say thanks for choosing Spark for their mobile services, not all customers opt to take up this offer. With that in mind, we provide support with the Registration Process and get issues with it resolved, this is something we do not give a reimbursement on."

All the literature they sell the plan on clearly states it is part of the plan and is in the mobile contract. Got a refund eventually after constantly escalating, spent the next 4 months trying to get Spotify premium free to work as part of the mobile plan, got a refund out of them for every month but only because I constantly harassed them to honour the terms written into the mobile contract, never did get it working, cost me a heap of time and money...the Com Com is absolutely correct to take this action, where there's smoke...

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You don't think that the CC is only thinking about making some fines money?

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Reminds me of the famous quote from a former CEO of Telecom - the use of confusion as a chief marketing strategy. Has anything changed? Maybe 'agile' justs means doing more of it faster.

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I’m hardly surprised. I had an issue where I gave 30 days notice to cancel broadband services yet 35 days later another month of charges appeared on my final bill. Considerable time was spent contacting spark to sort this out and they wouldn’t budge. They expected me to pay the month and then a month later would refund the charges. Only once I posted on social media did they get in contact to say a hold could be placed on the account.

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Everyone hates Telcos so fair game

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Yeah it seems to be what it's all about. Just more telco bashing. How come you never see them going after the power lines companies or power companies for that matter, that screw everybody? Too close to the govt maybe.

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Competitive pressures are turning Telco companies into boiler room type operations.

Value will shift from regional telco's to international satellite providers within 10 years.

IE satellites providing international connectivity with telecom companies providing last leg communications from land based exchanges to your home.

It's a ticking time bomb.... that's why you've seen telco companies move to content distribution rights - value shifting from the Sky TV's to Netflix.

They know their market position and dominance is coming to an end and what do?... "Squeeze all the juice out of that lemon" ....

Chorus is where the value will ultimately end up with "Spark" being a relic of the past.

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