Full Federal Court upholds "free" mobile phone conviction

20 December 1996
The full Federal Court today upheld the conviction of Nationwide News Pty Limited (publisher of Sydney's Daily Telegraph newspaper) for misleading the public in relation to a free mobile phone promotion in 1994. Fines of $120,000 against the News Corporation subsidiary were also upheld.

The advertisements in the then Telegraph Mirror promised readers a 'free' mobile phone but the conditions attaching to the offer meant readers had to pay more than $2,000 in related charges. In August 1996, Justice Heerey found the company guilty of six breaches of the Trade Practices Act following Australian Competition and Consumer Commission action.

"The Full Court decision stresses that advertisers cannot assume people are so cynical that they expect every 'free' offer must have an expensive catch," Chairman of the ACCC, Professor Allan Fels said today.

"An asterisk or the words 'conditions apply' is not enough to inform consumers that they must actully pay to get the 'free' good or service." In the judgment, Justice Lindgren noted: "Any respect in which the goods or services offered as 'free' may not be free should be prominently and clearly spelled out so that the magnetism of the word 'free' is appropriately qualified. In my opinion, this did not occur in the present case."

Professor Fels said mobile phone service providers should take special note. "It's an unfortunate fact that the mobile phone industry is still plagued by 'special' deals that are more expensive than they first appear. Certainly these problems are keeping the Commission very busy. If service providers, or promoters like Nationwide News, claim to offer 'free' handsets or services they must be up front about all the expenses, conditions and exclusions."

In this case, Justice Lindgren said the potential customer "...would have expected to incur expense on deciding to use the phone, possibly by way of an initial charge for connection... and certainly for calls made. But he or she would not have expected the conditions referred to in the advertisement to compel him or her to enter into a contract of a particular kind with a particular service provider..."

Release number: 
MR 177/96
ACCC Infocentre: 

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