VIPtel mobile phone telemarketers misled consumers: refunds follow

12 February 2008

The Federal Court in Darwin today declared that VIPtel Mobile engaged in multiple breaches of the Trade Practices Act 1974 during telemarketing calls across Australia.

Many customers were contracted to 24 month commitments while living in places without network coverage.

The Australian Competition and Consumer Commission took action following complaints from remote indigenous communities in the Northern Territory. More than 150 customers with no network coverage will receive refunds and will be able to cancel contracts with no penalty as a result of the ACCC action.

Other claims by VIPtel included:

  • calls to any mobile or landline would be charged at the cost of a local call
  • customers would pay no more than a capped monthly fee
  • the mobile phones could be used to send pictures and access the internet without additional charges
  • a customer would be able to terminate the plan at any time at no additional charge, and
  • network coverage was available Australia-wide.

The court found that none of these statements were true. Whilst many of the affected consumers were indigenous, non-indigenous consumers across Australia were also targeted.

The court also declared the directors, Mr Manan Chopra and Mr Vishal Gupta aided, abetted, counselled or procured the contraventions of the Act by VIPtel.

The company has been ordered:

  • not to engage in the conduct again
  • to arrange for the broadcast of a community service announcement in indigenous communities to educate consumers about telemarketing calls
  • to implement a Trade Practices compliance program, and
  • to pay costs of $50,000 to the ACCC.

The company also provided court enforceable undertakings to the ACCC regarding refunds to consumers.

In making the orders Justice Reeves said: "the most egregious aspect of EDirect's conduct was in its selling its mobile phones and service plans to people living in remote areas of Australia, including remote Aboriginal communities, when the slightest enquiry on its behalf would have disclosed that those mobile phones could not connect to the Optus GSM network because that network did not provide coverage to those remote areas of Australia."

He further stated: "Similar observations could be made about EDirect's conduct in publishing statements and maps on the VIPtel website which clearly conveyed the impression that EDirect was able to provide mobile phone coverage to almost all of the Australian land mass. Again the slightest enquiry would have revealed to EDirect that this representation was quite untrue."

He also said that: "The likelihood of detection of these sorts of breaches is slight, particularly in remote areas of Australia, and for that reason the full force of the law should be brought to bear in circumstances where, as is in this case, the authorities have managed to detect such breaches."

He said that: "I enquired of the parties whether there was any regulatory regime in place that required telemarketing calls of the kind involved in this case to be recorded, especially where they involve oral contracts. It seems to me that future detection would be increased if there were in place some regulatory regime."

ACCC Chairman, Mr Graeme Samuel, said it was appalling that consumers were committed over the telephone to direct debit contracts that would ultimately cost them from $900 to $2,300 where there was no mobile service available to them.

"It seems the telemarketers had a flagrant disregard for the truth in their pursuit of customers. The telemarketing calls, which originated in India, were often received by indigenous consumers for whom English was a second language. This factor combined with the agreeable nature of many indigenous consumers made them an easy target.

"The misleading conduct was exacerbated when some customers rang to complain and were given no assistance. One customer in a remote indigenous community was told that he should try standing on his roof to obtain a signal in circumstances where the nearest reception was 230 kilometres away.
"Consumers are encouraged to sign up to the Do Not Call* register if they do not wish to receive telemarketing calls. Alternatively, if you don't like what is being said in a telemarketing call, just hang up."

The ACCC acknowledges the assistance of NT Consumer Affairs, and the Money Business office on Elcho Island in this matter.

*To register on the Do Not Call register phone 1300 792 958 or online at: https://www.donotcall.gov.au/

Release number: 
MR 027/08
ACCC Infocentre: 

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