Federal Court declares internet service provider engaged in misleading, deceptive and unconscionable conduct

11 February 2003

The Federal Court has declared that the Internet service provider, Dodo Internet Pty Ltd, engaged in misleading and deceptive conduct in relation to representations it made concerning the cost of connection to its Internet service.

It also declared that Dodo acted unconscionably in dealing with consumer complaints about the representations.

The Australian Competition and Consumer Commission had alleged that Dodo represented to consumers that:

  • certain dial-in telephone numbers on Dodo's website, or provided to consumers by its sales representatives would enable consumers to access unlimited Internet access for the cost of a local call when, in fact, some consumers incurred long distance telephone charges by using dial-in numbers provided by Dodo; and
  • consumers had no right or remedy against Dodo in relation to their purchase of Internet access plans when, in fact, rights or remedies exist under the Trade Practices Act 1974 and other similar laws that cannot be waived by Dodo.

The ACCC further alleged that in relation to some consumers Dodo engaged in unconscionable conduct by, among other things, failing to check the accuracy of the dial-in telephone numbers provided, failing to investigate fairly and properly complaints made to Dodo, refusing to deal with or enter into negotiations with the complainants, and seeking to rely upon unlawful exclusion clauses which may have had fundamental and far reaching consequences for its customers.

By consent of both parties, Justice Mansfield declared that Dodo had engaged in misleading and deceptive conduct and made false or misleading representations in breach of sections 52, 53(e) and 53(g) and that it engaged in unconscionable conduct in breach of section 51AB of the Act.

The Court also found that two of Dodo's directors, Mark Baranov and Larry Kestleman, were knowingly concerned in the conduct.*

The Court granted injunctions that restrain Dodo and the three directors from making the same or similar representations to consumers for a period of three years unless Dodo has a reasonable basis for making the representation.

It also ordered Dodo to:

  • compensate any consumers who incurred long distance telephone charges and other liabilities to telecommunication providers as a result of Dodo’s conduct; 
  • inform its consumers of the Court's findings; and 
  • implement and undertake a trade practices compliance program.

The orders were made with the consent of both parties.

"This matter sends an important message to Internet Service Providers, who must ensure that all terms and conditions of internet use are sufficiently brought to the attention of potential customers prior to entering into a contract with the customer", Acting ACCC Chairman, Mr Sitesh Bhojani, said today.

"Consumers should be wary when they are selecting an ISP, to ensure that it will best meet their internet needs. Consumers should not sign up any contract or agree to receive internet services until they have had an opportunity to read the terms and conditions".

Release number: 
MR 028/03
ACCC Infocentre: 

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