Telcos warned over false advertising

The Australian Competition Consumer Commission (ACCC) has put telecommunications companies on notice over dodgy advertising and is ready to impose hefty fines unless they change their ways.

ACCC chair Rod Sims said telecommunications companies need to ensure their advertising is clear and transparent or face legal action, including much higher penalties.

Mr Sims also said the ACCC may bring proceedings against executives who knowingly approved misleading advertising.

Earlier this year the ACCC began investigating Optus, Vodafone and Telstra’s use of the term ‘unlimited’ 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 ‘unlimited’ mobile data, but the services had speed caps imposed on particular uses or after a certain data threshold was reached.

The ACCC found that:

  • Optus’ ‘unlimited’ plan imposed a 1.5Mbps speed restriction on tethering, streaming and downloads. Heavy data users could also be deprioritised during congestion.
  • Vodafone’s ‘unlimited’ plan provided an initial data allowance at usual speeds, after which all usage was speed capped at 1.5Mbps.
  • Telstra’s ‘unlimited’ 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 inform consumers of the existence and impact of the limitations, in the ACCC’s view.

The Court considered Telstra advertisements with the tagline “One word for Australia’s best mobile network. Unlimited,” 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’s findings and the ACCC’s interactions, all three retailers 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,” Mr 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.”

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Written by Ben

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