Tel.Pacific had misled and deceived consumers over its international pre-paid phone card products, the Federal Court has found.
After action by the Australian Competition and Consumer Commission, the court has made declarations and orders by consent against Tel.Pacific.
The ACCC alleged Tel.Pacific misrepresented the nature, benefits and value of certain of its pre-paid phone cards which are used to access cheaper international calling rates. It was alleged Tel.Pacific represented that the cards would provide callers with a specific amount of call time when the time could not be ordinarily achieved because of undisclosed fees and charges. The ACCC alleged Tel.Pacific represented that no fees, other than timed call charges, would apply to certain phone card products when that was not so.
Justice Gordon declared that Tel.Pacific's conduct was false, misleading and deceptive in breach of the Trade Practices Act 1974 and made orders restraining the company from engaging in similar conduct in the future.
She also required Tel.Pacific to provide information to retailers of its phone cards, its customers and its main competitors about the outcome of the ACCC's proceeding and the fees applicable to using its phone cards.
Tel.Pacific was also ordered to establish a trade practices law compliance program and to pay a fixed amount of the ACCC's legal costs.
In handing down her judgment, Justice Gordon remarked that certain elements of the declarations and orders she made were "directed to informing the relevant market … of the outcome of the litigation so that those in the market have at least a broad understanding of the ways in which [Tel.Pacific] has had to change [its] conduct."
ACCC Chairman, Mr Graeme Samuel, said companies must be transparent in the way they advertise their products so that consumers are empowered to make informed choices.
"It is highly unsatisfactory, if not illegal, for companies to make strong headline claims about their product and then seek to improperly qualify those claims in an avalanche of fine print.
"Where companies use complex pricing models that require consumers to undertake significant inquiries to understand what they are purchasing, as pre-paid phone card suppliers do, they run a high risk of contravening the Trade Practices Act. If there are important fees and charges attaching to a product, then be up front in letting the consumer know about them.
"I made it very clear when I addressed the Australian Telecommunications Users Group on 13 March 2009 that the ACCC has drawn a line in the sand in relation to the poor advertising practices of telecommunications companies.
"The industry is squarely on notice and should pay careful attention to the outcome of this matter."