ACCC takes action against TPG for misleading customers

4 December 2018

The ACCC has instituted proceedings in the Federal Court against TPG Internet Pty Ltd (TPG) for engaging in misleading conduct about a $20 ‘prepayment’ made by consumers, and including unfair prepayment contract terms in some of the telco’s plans.

Customers signing up to a TPG plan had to pay $20 for what TPG describe as a “prepayment” to cover costs that might be incurred but are not included in their plan, such as overseas phone calls. From March 2013, TPG represented on its website that the prepayment of $20 could be used for excluded telecommunications services before the consumer cancelled their plan. 

However, the prepayment operates as a non-refundable fee and TPG retains at least $10 of the prepayment when a customer cancels their plan.

“A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable. It is unacceptable that TPG only disclose this forfeiture in fine print,” ACCC Deputy Chair Delia Rickard said.

In addition, TPG’s terms mean that when a customer’s prepaid balance falls to $10 or lower, TPG automatically ‘tops-up’ the prepayment by a direct debit from the customer to return their prepayment balance to $20. This means that customers can’t use at least $10 of the prepayment for telecommunications services when they cancel their plan, which is not disclosed.

“Since March 2013, the ACCC estimates that TPG is likely to have retained millions of dollars paid by consumers in prepayments that were forfeited,” Ms Rickard said.

The ACCC alleges that TPG’s representations to customers about the forfeiture and automatic ‘top-up’ function are misleading.

The ACCC also alleges TPG’s standard contract term requiring forfeiture of the prepayment is unfair under the Australian Consumer Law.

“We have and will continue to take action to hold telcos to account for failing to comply with the Australian Consumer Law," Ms Rickard added.

The ACCC is seeking penalties and compensation for consumers.

Examples of the prepayment in practice

Example 1

A customer makes an international call which costs $12 and international calls are not included in their plan. TPG deducts $12 from the $20 prepayment, which means the prepayment falls below $10. This triggers a top-up of a debit of $12 from the customer to take the prepayment balance back to $20.

The customer does not use any further telecommunication services that are not included in their plan. The customer forfeits $20 when they cancel their plan.

Example 2

A customer never uses any telecommunication services that are not included in their plan. The customer forfeits $20 when they cancel their plan.

Example 3

A customer makes a call to a 1300 number which costs $8 and calls to 1300 numbers are not included in their plan. TPG deducts $8 from the $20 prepayment.

The prepayment balance then sits at $12.

The customer then cancels their plan. The customer forfeits $12 when they cancel their plan.

Release number: 
249/18
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