Commerce Commission takes Spark to court over ‘misleading billing’

Spark says the action is unwarranted

The Commerce Commission has taken Spark to court alleging it made false or misleading representations in relation to its billing and a $100 offer for new customers. Spark says the action is unwarranted because its transgressions were due to technical problems, not deceptive intent, and because it has already made extensive efforts to redress its wrongdoings.

The Commission says the charges arose from three separate alleged failings:

- Spark overcharged customers for broadband data when a fault in Spark’s broadband network misrecorded customer data usage.

- Spark sent letters offering new customers a $100 account credit for subscribing to a particular broadband plan but failed to mention the offer could only be redeemed by phoning Spark. The Commission alleges the offers created the false impression that customers signing up online would receive the credit.

- From 2 June 2014 Spark’s terms and conditions said charges would stop 30 days after the customer gave notice to terminate their contract. However, the Commission alleges that the customer’s final bill included charges for the entire next monthly billing period regardless of when the Spark service stopped.

Spark admits to all these allegations, but says they were the result of an equipment fault in 2015 that affected data billing for a small percentage of broadband customers.

“In respect of all of these issues Spark has already applied credits to the accounts of all impacted customers and, for former customers, has made extensive efforts to return all money owed so they receive the benefit of their credit,” Spark said.

Further, Spark says it has also made donations in 2017 to various charities totalling approximately $268,000, in recognition of the interest it was likely to earn on unclaimed credit balances arising from the 30-day billing issue, because it did not intend to profit from the failure.

Spark managing director Simon Moutter said: “These were all system-based errors caused by genuine mistakes with no malicious intent involved on the part of Spark.”

Read more: Spark downgrades guidance as it accelerates shift to agile operations

He added: “Our preference has consistently been to settle these matters and avoid court proceedings. To this end we have held extensive discussions with the Commerce Commission, including our suggestion that we make a settlement payment (possibly in the form of further charitable donations) to acknowledge our errors.

“Given the unintentional nature of the errors involved and the extensive actions already taken by us to put things right for our customers, we are obviously disappointed the Commerce Commission is now embarking on what will be a costly, time-consuming court process for both parties.”

The Commerce Commission has declined to comment beyond announcing its intent to launch the action.

Spark said the 2015 equipment fault issue has been resolved for all 5,325 affected customers, with credits or compensation totalling $216,937, and the 2016 ‘welcome credit’ issue had been resolved for all 463 affected customers with credits totalling $46,300).

Read more: Spark sells 50 percent share in Connect 8 to Electra

The 30-day billing issue affected a number of customers who left Spark over a three-year period and Spark said it had since given refunds to most of them.

“As of last week, there were up to 8,829 former customers, owed a total of $304,070, who despite Spark’s best efforts to contact them had not responded.  More than 90 percent of these former customers are owed less than $100.”

 

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