ACCC obtains consumer compensation over misleading mobile phone advertisements

The Australian Competition and Consumer Commission has accepted court enforceable undertakings from Crazy John's in which the mobile telephone service provider will compensate customers who feel they were misled by the company's 'Free*' or '$0*' handset advertising campaign.

The ACCC instituted proceedings in the Fast Track List in the Federal Court in Melbourne against MobileWorld Operating Pty Ltd (trading as Crazy John's) on 17 January 2008 for alleged unfair trading practices.

Crazy John's has admitted that it engaged in misleading or deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 by representing that handsets on certain of its Crazy Phone Plans were available 'FREE' or for '$0', when in fact consumers were effectively paying for the handsets through higher call rates than those available on comparable plans which did not include a handset.

Crazy John's will provide affected customers on the relevant 24-month Crazy Phone Plans with a monthly credit for the remainder of their current contract term. All customers on these plans will be sent a notice from Crazy John's outlining the misleading conduct and informing customers that they should contact Crazy John's to receive compensation if they feel they have been affected by the conduct.

Crazy John's has also undertaken to:

• cease advertising 'Free*' or '$0*' in a misleading manner
• implement an extensive trade practices law compliance program, and
• pay $15,000 of the ACCC's legal costs in this matter.

"The consumer compensation that has been obtained, which would not have been available through court orders, demonstrates the strength and flexible nature of the section 87B undertaking regime," ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC is pleased with the outcome of this matter and acknowledges the co-operation shown by Crazy John's in quickly removing all misleading advertising materials and offering redress to aggrieved consumers."

Background

Section 52 of the Trade Practices Act 1974 states that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.