The Australian Competition and Consumer Commission has begun court action under the Trade Practices Act 1974 against two overseas based companies for alleged misleading advertising of mobile telephone premium services in Australian youth magazines.
The ACCC has also obtained enforceable undertakings under the Act from the Australian publishers of the youth magazines to improve the overall standard of advertising for mobile premium services.
Mobile premium services include wallpapers, ring-tones, horoscopes and games supplied through a mobile telephone or landline. Purchase of the services typically involves sending an SMS message to a number starting with '19'. The services attract a higher charge than a normal telephone call, and many involve on-going weekly or monthly subscription charges.
Legal proceedings have been commenced against the AMV Holdings Limited, a UK company, and against Teracomm Limited, a Bulgarian company, for alleged misleading advertisements for mobile premium services published in Dolly, Girlfriend and TV Hits magazines.
The enforceable undertakings have been provided by Pacific Magazines, the publisher of Girlfriend and TV Hits, and ACP Magazines, the publisher of Dolly, Cosmopolitan and Cleo.
The ACCC is concerned that the overall impression created by the attractive and busy layout of some advertisements for mobile premium services appearing in youth magazines, combined with the inadequate and inappropriate use of fine print disclaimers, is likely to be misleading in breach of the Act.
Of particular concern is advertising that does not adequately disclose the nature of the services being offered and their costs, such that consumers responding to the advertisements would unknowingly be subscribing to an ongoing and costly service rather than acquiring a one-off purchase of a particular ring-tone or wallpaper.
"Young, unsophisticated readers are costing themselves or their parents a lot of money by unwittingly signing up to these services. Advertisers must not rely on minute fine print to disclose important terms and conditions. The costs and nature of the services must be prominently and clearly identifiable within the advertisement, particularly when it is targeting young people," ACCC Chairman, Mr Graeme Samuel, said today.
To address the ACCC's concerns Pacific Magazines and ACP Magazines cooperated and provided enforceable undertakings which require that advertisements for mobile premium services published in their magazines targeted at young readers must clearly state:
- that the service is a subscription service
- the cost of the service, and
- the eligibility of consumers to receive the benefit of the services,
where this information is revealed in the relevant terms and conditions of the services.
In addition, both publishers are to publish an article in their youth magazines to inform readers of the nature, cost and characteristics of mobile premium services advertised in the magazines. They are also to review their trade practices compliance programs.
In relation to the legal proceedings commenced against AMV and Teracomm, Mr Samuel noted that many suppliers of mobile premium services to Australian consumers are based overseas.
"It is important for international companies operating in Australia to ensure their advertising is not misleading in breach of Australian law."
The ACCC will continue to monitor advertisements promoting mobile premium services both in the print and other media and will take action where those advertisements are likely to be misleading or deceptive.
Media inquiries: Ms Lin Enright (02) 6243 1108 or 0414 613 520
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