Startel to pay $320,000 for telemarketing breaches of consumer law

9 April 2014

In proceedings brought by the Australian Competition and Consumer Commission, the Federal Court yesterday ordered by consent that Startel Communication Co Pty Ltd (Startel) pay total penalties of $320,000 for misleading consumers about their rights under the Australian Consumer Law (ACL) when cold calling consumers to sell mobile phone plans.

The ACCC had alleged that Startel had breached consumer law by failing to inform consumers that they could get out of the contract within 10 business days, didn’t supply documents which would help consumers decide whether they wanted to proceed with the contract and took money out of bank accounts during the cooling off period.

The complaint that sparked the ACCC’s investigation was made during an ACCC outreach visit in the remote Indigenous community of Santa Teresa in the Northern Territory. Ultimately, it was identified that more than 2,500 customers Australia-wide were affected by the conduct, including consumers in a number of remote Indigenous communities in the NT.

When making these orders, Justice Collier stated “The provisions of the ACL breached by Startel concerned many instances where Startel mislead consumers as to their rights, or failed to advise them of their rights, or acted inconsistently with their rights, or imposed unlawful conditions. I do not consider that the contraventions identified by the ACCC and conceded by Startel were in any way trivial, or mere technical breaches of the ACL. The relevant provisions of the ACL seek to ensure that consumers negotiating agreements with such dealers in such circumstances are provided with agreements which fully and fairly inform them of their rights to terminate the agreements. In the circumstances of this case the contraventions of the ACL by Startel were serious, numerous, and occurred over a relatively lengthy period of time.”

The Court declared the conduct was in breach of the ACL and gave orders prohibiting its repetition. In a first for the ACCC, the Court also made a community service order requiring Startel to publish and advertise an online educational web-page to inform consumers about their rights when they receive a telemarketing call. 

“Startel breached law that is designed to protect consumers when they have been surprised by a telemarketing call and persuaded to enter into a voice contract,” ACCC Commissioner Sarah Court said. 

“Consumers have the right to reconsider and opt-out of unsolicited contracts and they should not be told otherwise. It is particularly concerning that Startel accepted payment during the statutory cooling off period.”

“Traders need to be aware that the ACCC will go far and wide in its work to detect contraventions of the Australian Consumer Law, particularly when these contraventions impact on Indigenous consumers,” Ms Court said.

Release number: 
MR 79/14
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