The Federal Court in Sydney has imposed penalties totalling $375,000 against two Australian companies, Global One Mobile Entertainment Ltd and 6G Pty Ltd for false and misleading advertisements for mobile premium services.
In promoting its services, Global One or 6G represented that a consumer could purchase the service at a one-off cost when in fact the consumer was actually requesting access to an ongoing premium rate mobile subscription.
ACCC chairman Graeme Samuel said this matter is the latest in a string of nine successful ACCC outcomes against problematic conduct in the mobile premium services industry.
"The market is changing and newer technologies may see the end of many of these services. Traders in mobile content looking to make a quick gain by misleading consumers will find themselves in court facing significant penalties."
Global One and 6G provide mobile premium services including ring tones, games and quizzes.
The court found that at various times from February to July 2010, the two companies had misled consumers through four television advertisements broadcast on both free-to-air and pay TV. These advertisements were broadcast at times or during television programs that would have attracted the younger viewer.
The subscription services promoted were through advertisements for:
- The 'One Time' ring tone by Justin Bieber
- Entry to a quiz with a prize of $100,000
- The 'Space Invaders' mobile phone game, and
- The 'Doodle Jump' mobile phone game.
The highest individual penalty of $150,000 was imposed on Global One for its 'One Time' Justin Bieber ring tone advertisement. In her preliminary judgment handed down on 21 April 2011, Justice Bennett stated, “The Justin Bieber Advertisement is, in my view, the most egregious of the Advertisements. Clearly it was of appeal to under 18 year olds, including under 15 year olds.”
A penalty of $75,000 was imposed on 6G for each of the other three advertisements.
The court also made declarations, ordered injunctions, costs and that Global One and 6G each implement a compliance program to ensure a better understanding of their rights and obligations under the Competition and Consumer Act 2010.
This matter formed part of a broader strategy implemented by the ACCC to assist in addressing problems in the complaints-ridden mobile premium services industry. Since 2008, the ACCC has taken action against eight other industry participants, all with positive outcomes to date. This included undertakings from ACP Magazines and Pacific Magazines to no longer print problematic advertisements for mobile premium services in their key youth magazines, Dolly (ACP Magazines) and Girlfriend (Pacific Magazines).
The changes in regulatory requirements, market interest shifting towards smart phone technology such as 'apps' and court and other regulatory action by the ACCC and other agencies has resulted in a dramatic decline in complaints about mobile premium services. The ACCC will continue to contribute to ongoing reviews of the MPS Code and monitor changes in the technology and their impact on consumers.
Both Global One and 6G have indicated that they will appeal the court's decision.
Further information on dealing with mobile premium services can be found on the ACCC's website.