ACCC hung up on lack of clarity in phone service advertising

19 February 2009

Parts of the phone industry continue to engage in poor practices that frustrate consumers, despite a string of Australian Competition and Consumer Commission enforcement actions dealing with lack of clarity in advertising.

"The ACCC is concerned that providers of phone services like plans, phone cards and mobile premium services often fail to properly disclose the true costs and other important terms upfront," ACCC Chairman, Mr Graeme Samuel, said.

"Some deals are confusing and feature busy, distracting visuals and hard to read fine print, which on closer scrutiny may be misleading.

"Phone service providers must lift their game and recognise the overall impression created by advertising has to be a true and accurate reflection of the service delivered."

"Complaints to the ACCC indicate consumers are fed up with getting charged more than they bargained for when the bill arrives, and getting less value than they were promised in the case of phone cards."

"This affects people from all walks of life – young people who are attracted to mobile premium services like ringtones and games; travellers and others who see phone cards as a great opportunity to make international calls and then find they don't get the value they think they've paid for; Australians in regional areas who might find they're paying for services they can't access – the list goes on. And the costs to consumers can have a devastating impact on personal and household budgets," Mr Samuel said.

The range of recent actions taken by the ACCC reflects the extent of the problem across phone services. 

In the past two weeks the ACCC has taken enforcement action against companies such as Tel.Pacific on phone cards; TPG Internet for advertising of 'unlimited' phone plans; and AMV Holdings & Teracomm Limited for advertising of mobile premium services.

This follows a number of actions in 2008 which cover similar ground, where providers and carriers were not up front about the offer and the terms and conditions on phone services.

Conduct that is misleading or deceptive, or is likely to mislead or deceive is outlawed under the Trade Practices Act 1974.  The Act provides for a range of remedies and enforcement actions where the law has been broken, including civil and criminal proceedings.

Mr Samuel said publishers and broadcasters also need to take note of warnings, as in some circumstances, they too may be liable for running ads which they know are misleading and deceptive. 

"Recently two major magazine publishers ACP and Pacific magazines undertook to improve the overall standard of advertising for mobile premium services.  The ACCC supports that response and encourages other media to be responsible in their advertising.

"While the ACCC will deliver this message to industry directly and will offer guidance on areas for improvement, increased enforcement action can be expected if standards aren't raised and the ACCC's calls to improve practice are ignored."

The ACCC has also written to mobile and wireless broadband providers reminding them that broadband speed claims should reflect typical customer experience. Advertising of mobile broadband speeds should avoid references to theoretical or peak speeds, particularly when these speeds cannot always be achieved using the devices available on the network.

Further information on phone services is available via the Buying telecommunications services hot topic in the For Consumers section of the ACCC website.

A fact sheet on broadband connection speeds for consumers is also available in the Phones & internet services section of the ACCC website.

Links

Release number: 
NR 033/09
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