Telecom Mobile fined $10,000 for misleading ads

The Commerce Commission says a series of fines imposed on telcos for Fair Trading Act breaches this year is intended to send them a message that they must obey the law.

The Commerce Commission says a series of fines imposed on telcos for Fair Trading Act breaches this year is intended to send them a message that they must obey the law.

Telecom Mobile was fined $10,000 in the Wellington District Court yesterday after pleading guilty to two charges of breaching the act. The charges related to ads run at the end of 2001 aimed at getting 025 and rival cellular network subscribers to switch to its new 027 network.

The Telecom fine follows the imposition of a $3000 penalty last month on TelstraClear under the Fair Trading Act for its “Chat ‘n Surf” ad campaign; at the start of the year, TelstraClear was fined $5000 over a Sky TV promotion.

“The Commerce Commission has been very concerned at the level of complaints we’ve been getting in the telco sector,” says fair trading branch director Deborah Battell. “One of the reasons we’ve taken these actions is to sheet home to the telcos the requirement for them to comply with the act.”

Battell says while she hasn’t yet found out whether fewer complaints are being laid, there are signs that the telcos are making a greater effort to operate within the law.

She says they have “completely overhauled” compliance procedures so that lawyers are involved earlier in the process of developing ads and efforts have been made to raise awareness of the act among staff and suppliers, including ad agencies.

The latest breach was “not at the most serious end” of the range of offending, Battell says, but is not the way the commission thinks large corporates should behave. The charges, laid before a review of the Fair Trading Act doubled the possible fine, carried a maximum penalty of $100,000.

The ads which led to the charges either understated the cost of switching to Telecom's 027 network or overstated the benefits, by not clearly disclosing attached conditions.

TelstraClear's “Chat ‘n Surf” campaign breached the act by not clearly stating that its offer of 30 hours “free” internet access per month if a minimum of $30 was spent on toll calls was not available to about 53,000 of its customers with existing phone line and/or paradise.net plans.

In February, TelstraClear was fined $5000 after pleading guilty to misleading its customers as to the nature of a Sky TV promotional offer. A promotional flyer and magazine insert that offered all its 30,000 Saturn TV customers an opportunity to subscribe to certain Sky channels was found not to apply to the approximately 1300 customers who only subscribed to Saturn TV, and required them to sign up to additional phone and/or internet services to be eligible.

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