Optus breached the Trade Practices Act 1974 by engaging in misleading and deceptive conduct through the advertising of its "THINK BIGGER" and "SUPERSONIC" internet plans, the Federal Court has found.
In advertising these broadband plans, Optus represented that, for a monthly payment, a consumer would receive a headline data allowance of broadband which was then split into peak (midday to midnight) and off-peak (midnight to midday) data allowances.
The Australian Competition and Consumer Commission alleged that Optus had not sufficiently disclosed that the service would be speed limited to 64kbps once a consumer exceeded their peak data allowance. The consequence was that any unused off-peak data would no longer be available at a broadband speed, and as such the consumer would not obtain the headline data allowance of broadband. Many common internet websites such as Facebook and Youtube cannot be effectively used at 64kbps.
Justice Perram found Optus' television advertisements "misleading, in my opinion, seriously so."
Further, when considering injunctions against Optus running similar advertisements in the future, Justice Perram stated that, "the contravention here is a serious one and the public should be protected from any further repetition of it."
Justice Perram also commented on the recent halt in the television commercials for the "THINK BIGGER" campaign, saying that he was, "far from convinced either that Optus recent cessation is anything other than opportunistic, or that it signals some newly obtained underlying comprehension of the need to avoid such tricky behaviour in the future."
Optus' position was that it had not breached the law because any consumer who may have been misled by the advertisements had their misapprehensions corrected through the Optus' call centre or website before they signed up for a plan. This argument was rejected by Justice Perram.
"This judgment reinforces the ACCC's long held position that this approach is not acceptable commercial practice and does not reflect what the law requires," ACCC chairman Graeme Samuel said today. "Companies cannot rely on their call centres to correct advertisements that have misled and deceived people.
"Consumers were told in these ads that they were going to get a certain amount of broadband, and only after you work through confusing and vague disclaimers that you realise that it's just not the case. Consumers and the ACCC are, frankly, tired of telcos using complex, confusing and deceptive advertising to fool consumers. This should serve as yet another reminder, that if these companies don't clean up their act, the ACCC will be here to take you to task, and you can expect to be hit with the full force of the law."
Justice Perram today made the following orders:
- an injunction restraining Optus from engaging in similar conduct for the next three years, and
- an order that Optus pay the ACCC's costs of the proceedings to date.
The ACCC is also seeking relief by way of corrective advertising and pecuniary penalties. Judgment on these issues will be delivered at a later date.
Optus launched the "THINK BIGGER" campaign on 25 April 2010 and the "SUPERSONIC" campaign on 2 August 2010. Optus advertised these plans through a number of media, including television, newspapers, billboards and direct marketing through the yellow envelope.
The plans dealt with in these proceedings are:
The "THINK BIGGER" Internet broadband plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $49.99 and
- 150GB of data (75GB peak + 75GB off-peak) for $59.99, and
The "SUPERSONIC" Internet broadband with Premium Speed Pack plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $69.99,
- 150GB of data (75GB peak + 75GB off-peak) for $79.99, and
- 170GB of data (85GB peak + 85GB off-peak) for $89.99.
The ACCC is also awaiting judgment in its proceedings against Optus in Melbourne, in which the ACCC has alleged that the use of the word "unlimited" in a number of Optus broadband advertisements was misleading and deceptive.