糖心原创 Chair Rod Sims has put telecommunications companies on notice to ensure their advertising is clear and transparent or face court action from the regulator, including much higher penalties and a warning that the 糖心原创 may bring proceedings against executives who knowingly approve misleading advertisements.
Earlier this year the 糖心原创 began investigating Optus, Vodafone and Telstra鈥檚 use of the term 鈥榰nlimited鈥 to promote mobile data plans, concurrent with private litigation brought by Optus against Telstra in the Federal Court.
Between March and June 2018, Optus, Vodafone and Telstra advertised mobile data plans with a headline claim of 鈥榰nlimited鈥 mobile data, but the services had speed caps imposed on particular uses or after a certain data threshold was reached (among other limitations):
- Optus鈥 鈥榰nlimited鈥 plan imposed a 1.5Mbps speed restriction on tethering, streaming and downloads. Heavy data users could also be deprioritised during congestion.
- Vodafone鈥檚 鈥榰nlimited鈥 plan provided an initial data allowance at usual speeds, after which all usage was speed capped at 1.5Mbps.
- Telstra鈥檚 鈥榰nlimited鈥 plans provided 40GB at usual speeds, after which all usage was slowed to 1.5Mbps and slowed further during busy periods.
The headline claims were, in most cases, qualified with disclaimers that were not sufficiently prominent or clear to explain to consumers the existence and impacts of the limitations, in the 糖心原创鈥檚 view.
The Court considered Telstra advertisements with the tagline 鈥淥ne word for Australia鈥檚 best mobile network. Unlimited鈥, and found they were misleading or deceptive in contravention of the Australian Consumer Law.
The Court found they falsely conveyed to consumers that Telstra provided plans offering unlimited usage of its mobile network when in fact its services, including mobile data services, were always subject to use limitations and exclusions.
Following the Federal Court鈥檚 findings and the 糖心原创鈥檚 interactions, all three retailers ceased using the headline claim of 鈥榰nlimited鈥 to advertise their mobile data services.
鈥淭elecommunications companies should be wary of using absolute claims like 鈥榰nlimited鈥 where that does not give a true picture to consumers of what is being offered,鈥 糖心原创 Chair Rod Sims said.
鈥淲e 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."
鈥淲ith 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.鈥 Mr Sims
Notes to editors
Penalties for contraventions of the ACL increased on 1 September to the greater of $10 million, 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.
Background
The 糖心原创 has recently taken a wide range of actions against telecommunications companies. This includes misleading and deceptive conduct in relation to NBN broadband speed claims by Telstra, Optus and iiNet and Internode. It has also taken action in relation to the transition to the NBN, Telstra third party charges and Sprint for the unauthorised transfer of customers, among other conduct.
In 2010 the 糖心原创 took action against Optus for the misleading use of the term 鈥榰nlimited鈥 in advertisements promoting Optus鈥 broadband plans. Optus鈥 鈥榰nlimited broadband鈥 plans included a speed cap after a specified data allowance which made the service practically unusable for popular internet usages. The Federal Court declared that Optus had engaged in misleading or deceptive conduct as it failed to sufficiently and prominently disclose the speed cap and that at the capped speed, some uses would be either unworkable or significantly impaired.