Telcos cop Commerce Commission fines and warnings

Telcos plead guilty to Fair Trading Act breaches

gavel to show justice

The Commerce Commission has fined three Vocus subsidiaries — CallPlus Services (trading as Slingshot), Flip Services and Orcon — a total of $121,500 for making false representations in customers’ invoices.

It has also warned Vodafone for misleading consumers about account credits and for representations in a loyalty discount promotion that were “likely misleading”.

The fines were levied after the telcos pleaded guilty to 13 charges under the Fair Trading Act for conduct that occurred between 2 January 2012 and 1 March 2018. 
According to the commission, all three companies’ terms and conditions said charges for customers’ internet and/or landline services would stop one month after they gave notice to terminate their contracts. As a result, customers overpaid around $132,000.

“The companies issued final invoices to nearly 6,000 customers which included charges for services beyond the one-month notice period,” it said.

“In doing so, the companies misrepresented their rights to payments because their customers only owed payment for the services provided prior to the agreed termination date.”

Auckland District Court Judge Glubb said the overcharging was the result of extreme carelessness: “It was incumbent upon them to put in checks and balances to ensure no misrepresentations… It was a failure to implement and then ensure proper processes were operating.”

The commission said each company had internal instructions for billing staff to manually adjust invoices, but these instructions were applied inconsistently.

Commission chair Anna Rawlings this was the third case in the past year relating to telecommunications providers billing customers after their contracts finished.

In March Spark was fined $675,000 after pleading guilty to charges relating to misleading consumers in its customer invoicing and a $100 welcome credit offer to new customers.

In May Vodafone was also fined $350,000 after pleading guilty to charges relating to false representations in invoices it sent to customers.

Vodafone’s latest transgressions, for which it received a warning, were: that it failed to apply certain credits to five customer accounts on a monthly basis, despite telling them verbally and in emails that it would do so; that, in a target email, it offered customers who were at or near the end of their broadband contracts a $10 per month loyalty discount if they re-signed for a further 12 months.

In the first instance the commission said, in its view, Vodafone had likely breached the Fair Trading Act by making false representations about the price consumers were required to pay.

In the second, it said the discount offer was likely to mislead customers because it created the overall impression that customers who re-signed would receive a discount off the price they were currently paying.

“In reality, the discount was taken off Vodafone’s standard pricing plans at the time, and by signing up, customers would lose their existing discounts,” the commission said. “In some cases, this meant customers may have ended up paying more per month, having re-signed, than they would have if they had rolled over their previous contract.”

Copyright © 2020 IDG Communications, Inc.

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