Australian Competition and Consumer Commission (ACCC) Chair Rod Sims has put telecommunications companies ‘On Notice’ over to any false or misleading advertising.
The ACCC foreshadowed telcos will be subject to either much higher penalties for future breaches or possible court action for any executives who knowingly approve misleading advertisements brought against them personally. The harsh warning comes after the ACCC began investigating Optus, Vodafone and Telstra earlier this year over use of the term ‘unlimited’ to promote mobile data plans. At the same time this investigation was occurring, Optus took Telstra to the federal court over ‘endless data’ campaign.
In its notice, the ACCC said that between March and June this year, the three major telcos (Optus, Vodafone & Telstra) advertised mobile data plans with “unlimited” mobile data, but the services all imposed caps on particular uses after a certain data threshold was reached – therefore not really ‘unlimited’.
The ACCC determined that the disclaimers provided by the major telcos were not sufficiently prominent or clear to explain to consumers the existence and impacts of the limitations. Furthermore, the Federal Court decision between Optus and Telstra determined that Telstra’s ‘One word for Australia’s best mobile network: Unlimited’ tagline was misleading or deceptive and in contravention of Australian Consumer Law under the Competition and Consumer Act 2010. The court found the claim by Telstra falsely conveyed to consumers that Telstra provided plans offering unlimited usage of its mobile network, when in fact its services, including mobile data, were always subject to use limitations and exclusions.
Since the Federal Court’s findings and the ACCC’s interactions, Optus, Vodafone and Telstra have since ceased using the headline claim of ‘unlimited’ to advertise their mobile data services.
“Telecommunications companies should be wary of using absolute claims like ‘unlimited’ where that does not give a true picture to consumers of what is being offered,” ACCC Chair Rod Sims said.
“We have taken a range of actions against telecommunication companies for misleading consumers. It is about time they showed more respect for their customers and the Australian Consumer Law.”
“With much higher penalties now available for breaches of consumer law, I hope they will take their obligations more seriously. From now on consumer law penalties will seriously affect their bottom line, and we will not hesitate to seek the highest possible penalties.”
The notice also comes at a time when the Australian Consumer Law contraventions and subsequent penalties (fines) was increased from 1 September this year to $10 million or three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of the annual turnover in the preceding 12 months. Penalties against individuals under the ACL also increased from $220,000 to $500,000 per breach.
