ACCC alleges VIPtel Mobile misled customers and acted unconscionably

19 August 2010

The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court, Darwin against EDirect Pty Ltd, which also trades as VIPtel Mobile.

The ACCC alleges EDirect engaged in both misleading and unconscionable conduct in entering into verbal contracts with consumers for mobile phone packages via telemarketing.

The ACCC alleges EDirect made misleading representations to customers that:

  • a friend or family member 'loved the calling plan' they had been offered by VIPtel and the bonus goods they had received,
  • the customer had pre-approved credit for a mobile phone plan and the customer could therefore afford the mobile phone contract on offer.

The ACCC further alleges EDirect engaged in unconscionable conduct in its sales method and in its dealings with specific customers by using a high pressure, relentless sales process demonstrated by:

  • misleading representations
  • conveying information about numerous contractual terms in a manner which made it difficult for customers to understand
  • requiring customers to only answer yes or no to questions designed to obtain their consent to enter into the contract, along with composing statements and questions in a manner designed to obtain a positive affirmation from the customer
  • keeping customers on the phone for lengthy periods of time and transferring customers between telemarketers
  • not providing customers with an opportunity to read the terms and conditions of the contract before providing their consent to enter into a contract
  • not giving customers the opportunity to consider whether the mobile phone plan they were agreeing to was suitable or affordable to them, or obtain advice about the plans
  • being aware that some potential customers had a disability and taking no, or no proper, steps to ensure those persons understood the terms of the contract, and
  • failing to have in place any mechanism to identify improperly obtained agreements.

The ACCC further alleges that EDirect knew, believed or could reasonably foresee that its sales methodology would be more likely to secure consent to contracts from persons who were unable to understand financial and/or legal matters quickly or in any depth.

In its dealings with some customers, the ACCC further alleges that EDirect's sales method was designed to continue to pursue a sale, and to obtain a customer's consent to the contract and to permit EDirect to make direct debits from a customer's account even when EDirect had identified or believed or had reason to believe that a customer:

  • had a disability
  • could not afford the mobile phone plan being offered
  • did not want the mobile phone plan
  • was clearly distressed or upset
  • wished to end the telemarketing call
  • was unwell
  • needed to attend a doctor's appointment
  • was unable to understand or had difficulty understanding the speech of the telemarketer
  • was unable to understand the terms and conditions of the contract; and/or
  • may not have the legal capacity to enter into the contract.

The ACCC is seeking declarations and injunctions to stop any contravening conduct and improve EDirect's business practices, and court costs.

EDirect has advised the ACCC that it will provide undertakings to the court, in lieu of the ACCC pursuing interim interlocutory orders.

The undertakings to the court are that EDirect will not make the representations referred to above that the ACCC alleges are misleading, and that it will ensure its telemarketers certify in a record maintained by EDirect, that, to the best of the telemarketer's belief:

  • the terms of the proposed agreement were clearly and accurately explained to the call recipient, and
  • that he or she had no reason to believe from his or her discussions with the call recipient that the call recipient did not wish to enter into the agreement, fully comprehend the terms of the agreement or fully comprehend the consequences of entering into the agreement.

The first directions hearing will be before Justice Reeves in the Federal Court in Darwin at 9 a.m. on Friday 17 September 2010.

Release number: 
NR 168/10
ACCC Infocentre: 

Use this form to make a general enquiry.