ACCC takes action against internet service provider

The Australian Competition and Consumer Commission has instituted legal proceedings against Dataline.net.au Pty Ltd, its managing director, Mr John Russell, Australis Internet Pty Ltd*, World Publishing Systems Pty Ltd, and senior staff over the supply of Internet related services to small businesses and consumers throughout Australia.

It is alleged that Dataline's business includes the sale of wholesale Internet provider services to small businesses, called virtual Internet service providers, for re-sale by VISPs to their customers. Australis is related to Dataline and is a VISP retailing Internet services.

The ACCC alleges that Dataline, Australis and WPS have breached the unconscionable conduct, misleading and deceptive conduct, false representations, undue harassment, and resale price maintenance sections of the Trade Practices Act 1974. The ACCC alleges that Mr Russell and senior staff of Dataline and Australis were knowingly concerned in the contraventions.

The ACCC alleges Dataline breached the unconscionable conduct provisions of the Act by:

• pressuring VISPs to sign an initial contract with Dataline and not permitting the VISPs to obtain legal advice before signing it
• threatening VISPs with disconnection of their Internet service if they did not sign further agreements with Dataline
• providing poor quality services to VISPs and their consumers including:

1. unreasonably slow connections and data access rates
2. intermittent inability to log on to Dataline's network
3. numerous busy signals when attempting to connect to Dataline's network
4. repeated disconnections after being logged on to Dataline's network for a duration less than advertised session limits
• providing false and misleading advice to consumers and VISPs in response to complaints about the services to conceal that Dataline was responsible for the poor quality
• intercepting, copying, forwarding and blocking e-mails to and from VISPs and VISPs' customers
• modifying VISP web sites so when a consumer connected to the sites and attempted to buy services from a VISP, the consumer would be taken to the Australis web site and prompted to transact with Australis instead of with the VISP
• threatening VISPs that Dataline would cease supplying the services and disconnect the VISP if the VISP did not, for instance:

1. enter into a new agreement with Dataline to replace the initial contract
2. enter their customers' credit card information on to a database called Pandora
3. pay monies owing to Dataline strictly within seven days
4. improve the performance of its VISP business
5. stop complaining to Dataline about the quality of the services
• verbally abusing VISPs and consumers over the telephone
• commencing legal proceedings against VISPs for alleged breach of contract.

It is alleged that Dataline and Australis engaged in this conduct for the purpose of obtaining the business of the VISPs' customers.

The ACCC alleges that, in the course of promoting its service, Dataline made representations to the following effect which were false, misleading and/or deceptive:

• Dataline would provide ongoing training to the VISPs in the use and resale of the services or software associated with the services

• Dataline would provide 24 hour technical support to VISPs with respect to the services
• Dataline would provide technical support to VISPs' consumers seven days a week
• Dataline kept busy signals to a minimum
• Dataline's network was a quality high speed network which had excess capacity to service a large number of consumers.

The ACCC further alleges that the threats of disconnection from Dataline's services amount to the use by Dataline or Australis of undue harassment or coercion within the meaning of section 60 of the Act.

The ACCC also alleges that Dataline, Australis and WPS made, or allowed to be made, in their favour debits to consumers' credit card accounts without any authority.

It is further alleged that Dataline engaged in resale price maintenance in contravention of section 48 of the Act by offering and selling its services to VISPs on the condition that the VISPs re-sold the plans to consumers at specified retail prices.

The ACCC is seeking court orders including:

• interlocutory relief that Dataline and Australis, and their agents, be restrained from:

1. taking any further step in legal proceedings in the District Courts of Queensland and Western Australia against VISPs
2. debiting the credit card of any person in connection with their business, without first having received a written authorisation for such a debit signed by the credit card holder
• final relief including declarations, pecuniary penalties, final injunctions, compensation for affected small businesses, refunds for affected consumers, publication of notices, implementation of a trade practices compliance program, attendance at trade practices compliance seminars, findings of fact, and costs.

An interlocutory hearing for the matter is listed for the Federal Court, Brisbane on 8 February 2002.

* Australis Pty Ltd ACN 099 680 430 is not associated with the companies referred to in this media release.