Vodafone fined $268,231 over Broadband Lite promotion

Telco found to have left customers misinformed and therefore improperly charged

Telecommunications provider, Vodafone, has repaid NZ customers a total of $268,231 following complaints of inadequate information and improper charges surrounding its Broadband Lite promotion which attracted more than 146,000 users.

The figure was agreed to in a settlement reached with the Commerce Commission.

Broadband Lite enables customers to access the Internet from their mobile phones. Vodafone offered a free, three-month trial of the service to some customers between July 2009 and September 2011. Following the free period, the service cost $10 per month.

Customers wishing to cancel the services without being charged were required to notify Vodafone prior to the trial’s expiration; costs were otherwise automatically charged to customers’ accounts. The telco’s terms and conditions stated it would send a text message to customers prior to the trial’s end reminding them to opt-out if they did not wish to continue with the service.

In late 2011, the Commission received complaints from customers who claimed they either mistakenly thought they were receiving the service for only the initial three-month trial period, or were inadequately informed of the terms and conditions of the promotion.

Following its investigations, the Commission concluded that almost 8000 customers did not receive the promised opt-out reminder text, and 3000 customers had cancelled the service but were still charged as the Broadband Lite add-on was not removed from their accounts.

“In reaching the decision to settle, we took into account the fact that Vodafone put things right as soon as it became aware of the problems,” Commission consumer manager, Stuart Wallace, said. “Nonetheless, the case highlights the potential problems with ’opt-out’ sales promotions.”

“Such promotions require the consumer to take an active step in order to not buy something. Customers can be locked into a deal that they don’t want and maybe did not understand. Unless the ‘opt-out’ condition is very clearly disclosed, these promotions have a high risk of being misleading and in breach of the Fair Trading Act.”

The Commission said Vodafone undertook its own investigations and took active steps to identify and rectify the issues. It has also reviewed and upgraded its Fair Trading Act compliance training program for all staff.

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