ComCom warns Spark, Vodafone, 2degrees and MyRepublic over confusing ads
A decade after Telecom boss Theresa Gattung made her infamous, caught-on-mic comment about using confusion as a marketing tool, it appears the practice is alive and well — at least in the opinion of the Commerce Commission. The watchdog says it has sent warning letters to four telcos about conduct it considers in breach of the Fair Trading Act.
“The complexity and range of goods and services offered by the industry mean consumers can be easily confused about product offerings," commissioner Anna Rawlings says.
“As we noted when announcing our 2017/18 priorities, the telco sector continues to generate a high volume of consumer complaints, despite previous compliance and enforcement work by the commission,” Ms Rawlings says (the Telecommunications Dispute Resolution service tracked a 35% increase in complaints in the year to June 30, 2016).
The commission is continuing to investigate further potential issues in the sector, including incorrect billing, failures to identify the subscription nature of mobile add-ons, incorrect calculation of broadband usage, unfair contract terms and representations concerning the nature and availability of internet services.
The regulator says the following actions breached the act:
• Making misleading representations about the price of its unlimited broadband plan, by not identifying or inadequately disclosing the additional cost of a modem and its delivery
• Making representations that Vodafone’s 2G network was imminently closing, in the marketing of Spark’s Skinny Mobile service. Last August, when Vodafone complained about the campaign, Skinny GM Ross Parker told NBR his company had changed its creative but said it was to avoid spending time on legal hassles rather than conceding his rival had a point. Today, a spokeswoman added, "Skinny ran a short advertising campaign suggesting that Vodafone’s 2G mobile network would be closing shortly. Skinny believed this was reasonable based on earlier news reports about Vodafone. However, the Commerce Commission’s view is that Skinny did not have reasonable grounds to make this claim, and we accept the commission’s decision." My two-cents-worth is that the ad was misleading, given it implied an imminent threat to customers with its tagline "Vodafone’s 2G network is shutting down. Switch before you’re ditched.” In fact, Vodafone was talking about switching off 2G at some point before 2025. Spark should just admit it's wrong, apologise and move on.
• Making misleading representations in the promotion of 12-month broadband plans bundled with “free” goods or services when, to receive the “free” goods or services, the consumer was required to pay additional fees or to take additional services
• On some occasions, a monthly headline price was advertised but that price did not include the additional fees to be paid to receive “free” goods or services
• Promoting its 1 Gigabit per second service up to two months before it was actually available.
• Representing that customers on its GAMER broadband service would not experience lag or latency when they could experience lag or latency caused by third party servers.
• Incorrect representations that consumers’ rights of cancellation under the uninvited direct sales provisions of the Fair Trading Act ceased to apply once MyRepublic had commenced the service.
The commission has also reminded the industry of several sizable fines levied in recent times:
• Trustpower was fined $390,000 in September 2016 for misleading consumers over the price and terms of its bundled electricity and unlimited data broadband offer, without making it clear the price of broadband was hiked in the second year of the two-year contract
• Also in September 2016, Vodafone was fined $165,000 for false price representations on invoices for its ‘Red Essentials’ mobile plan
• Vodafone reached a $268,000 settlement with the Commission in January 2014, over the promotion of its ‘Broadband Lite’ service
• Call Plus Services Limited (trading as Slingshot and now part of Vocus Group) was fined $250,000 in December 2013 over customer slamming, or moving people on to its service without their consent.
Telecommunications Users Association chief executive Craig Young tells NBR, "It's good to see these letters. The industry has a somewhat chequered history when it comes to the way they market, and this will remind them to be more careful."
He adds, "They also serve as a reminder to us, the users, to carefully consider all the terms that come with any offering."
A Vodafone spokeswoman says, "We have taken on board the commission's concerns and know it’s important for us to communicate as clearly and fairly as possible. The commission noted Vodafone has co-operated throughout this process."
2degrees tells NBR, "2degrees had its broadband promotion in the market when the Commission took action against another broadband provider. This prompted us to proactively contact the Commerce Commission as well as review and change our advertising. It’s really important to 2degrees that we do right by our customers and make things as clear as possible."
MyRepublic did not immediately respond to a request for comment.
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