Telecommunications businesses making misleading advertising claims are a high priority for Australian Competition and Consumer Commission action, ACCC Commissioner responsible for consumer issues, Ms Jennifer McNeill, warned today.
Launching Fair Call,* an advertising guide for telecommunications businesses, Ms McNeill said that the ACCC had decided to celebrate National Consumers' Day by reminding consumers and traders alike that it was continue to campaign against misleading claims in this important economic sector.
"Tomorrow (March 15) marks National Consumers Day, in Australia, and also World Consumer Rights Day which is observed around the world. One of this year's themes is telecommunications.
"The ACCC has taken a number of actions against misleading claims recently, including in the telecommunications industry.
"Just this week, the ACCC received court-enforceable undertakings from B Digital Pty Ltd (B Digital), which trades as b clear&simple, over advertising of its 'Two Free Phones plus $200 Free Calls' mobile phone package.
"B Digital admitted that its advertising for the package, which appeared in major newspapers nationally between October to December 2002, may have contravened the Act by:
- stating that the two phones and $200 of calls were “free” when, before they could receive the phones and calls, consumers had to commit to two $11 per month call plans for 24 months for a total minimum cost of $528; and
- only providing cost details per single plan/single phone/$100 call package and failing to specify that the total (minimum) cash price of the two plan/two phone/$200 call package over the 24 month contract period was $528.
"Words like 'free' can be very powerful marketing tools", Ms McNeill said. At the same time, these words may be more likely to mislead than others and advertisers need to take care when using them.
"Fair Call will guide advertisers as to the sort of questions they should be asking about their advertisements such as: Is what is being advertised as 'free' really free? An item really isn’t free if the cost of the so-called 'free' item is disguised with another price or available, say, in the case of mobile phones, only on the condition that you connect for a minimum term and with minimum expenditure on service fees.
"Advertisers must ensure that the actual facts about an offer, including cost details, are be balanced with the offer in the headlines. For example, if the headline offer is for a package comprising two mobile phones/two call plans, then the total cash price specified should be the total cost to the consumer of the two mobile phones/two call plans".
In addition to admitting that its conduct may have contravened sections 52 and 53(e) and 53C of the Act, B Digital has also undertaken to:
- publish a corrective notices in newspapers nationally as well as on its website;
- not engage in similar conduct in the future; and
- implement a trade practices compliance program.
The ACCC acknowledges that once this matter was drawn to B Digital's attention the company cooperated fully with the ACCC in offering the undertakings.
"Further, in late 2002 the ACCC obtained Federal Court orders that Telstra had misled consumers in relation to its pre-paid long distance ‘Say G’Day’ calling card product. Telstra made headline claims about a ‘FREECALL’ number that misled consumers about the significant charges (in some instances 10 times the advertised rate) that they would incur when using the product.
"And in February this year, the ACCC obtained Federal Court orders that Dodo Internet Pty Ltd had misled consumers about the nature of Dodo's internet connection services. Dodo's headline claims stated that their dial-in access numbers would allow unlimited internet access for the cost of a local call – when some consumers incurred (substantial) long-distance telephone charges".
"The ACCC urges all businesses and consumers to make sure they understand their rights of consumers under the Trade Practices Act and the responsibilities that go with them. Such rights are outlined on the ACCC website.
"All businesses must make sure they have systems in place to ensure that they do not violate consumers’ rights and that if something goes wrong they make amends.
"All consumers should make every effort to exercise their rights in the marketplace, not only for their own direct benefit, but to ensure Australian businesses keep their standards high.
"Most Australian businesses know that respecting consumers' rights is good for business. Everyone benefits from protecting these rights. When businesses trade unfairly, legitimate businesses also suffer".
State and Territory consumer protection agencies around Australia are commemorating National Consumers’ Day with their own activities. The ACCC invites both consumers and business to bring misleading headline claims to its attention through the ACCC Infocentre from Monday to Friday on 1300 302 502.
*Available on the ACCC website www.accc.gov.au.