Vodafone fined for breach of Fair Trading Act

Latest case is one of six between Vodafone and Commerce Commission

Vodafone was today fined $81,900 in the Auckland District Court after being found guilty of breaching the Fair Trading Act for its $1 a day mobile broadband offering in 2008.

A Commerce Commission statement says that between July and November 2008, Vodafone promoted a casual data rate of $1 a day, with a maximum allowance of 10MB a day. Information on its website said: “If you use less than $1 worth of data in a day, we’ll only charge for what you used.”

However, according to the Commission, Vodafone failed to give customers information on how the $1 a day charge would be calculated, or that they would incur the full charge of $1 if they used as little as 208.8KB (two percent) of the allowance.

In sentencing today, Judge Anne Kiernan said that Vodafone’s behaviour was at the “higher level of carelessness and inadvertence given that they were one of the market leaders in providing mobile phone internet services at the time.”

Vodafone chief marketing officer Greg Campbell said in a statement referring to today’s sentencing that the company had the right intentions, but “we didn’t get right in the way we communicated. Judge Kiernan found that we should have explained to customers how they would be charged if they used very small amounts of data, i.e. less than the 10MB cap."

He says that in 2008 the mobile internet was new and Vodafone wanted to make it accessible. “Up until our $1 a day for 10MB offer, New Zealanders were paying 10 times more for data use - $11.25 per MB,” he says.

“In our drive to keep things simple for our customers, we missed some important information. As soon as we found out that customers were unclear about this offer, we changed our website, a fact acknowledged by Judge Kiernan. We would never set out to mislead customers,” he says.

Today’s fine settles the second of six cases to reach court involving Vodafone and the Commerce Commission. Each case relates to alleged misleading promotions between 2006 and 2009.

According to a statement by the Commerce Commission, Vodafone pleaded guilty to the first charge, which related to the Vodafone Live mobile service and was fined $400,000.

There are four more charges still before the court, which Vodafone are defending. They relate to:

  • the extent of the coverage of Vodafone’s 3G mobile broadband service, made in Vodafone’s ‘broadband everywhere’ marketing campaign between October 2006 and April 2008.
  • the availability of a $10 free airtime credit for those customers who registered their details on Vodafone’s website between May 2007 and September 2008.
  • the comparative size of Vodafone’s mobile phone network between September 2008 and February 2009.
  • the price of a Sony Ericsson W200i mobile phone between July and August 2007.

Campbell acknowledged the six cases in his statement: “We are in the spotlight at the moment, for some offers and promotions which ran three years ago.

“We take customer service very seriously and we are committed to giving our customers a great experience. But, unfortunately, we can’t turn back the clock on some things that happened three years ago.

“The 1650 people at Vodafone genuinely want to do the right thing for our customers. We are doing our best to make things right by rolling out training and improving our sign-off processes so we are clear in our communications.

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