Vodafone to compensate customers over 'direct carrier billing' charges

16 July 2019

Vodafone has admitted to making false or misleading representations about its third-party Direct Carrier Billing (DCB) service and will contact and refund impacted consumers, following an ACCC investigation.

The investigation was carried out by the ACCC under a delegation of the Australian Securities and Investments Commission (ASIC)’s powers.

Vodafone admitted that it likely breached the ASIC Act from at least 2015, by charging consumers for content they had not agreed to buy or had purchased unknowingly.

Vodafone has given a court enforceable undertaking relating to the billing service, which charged Vodafone customers for ringtones, games and other digital content provided by third parties.

The DCB service was automatically enabled on Vodafone customers’ mobile accounts, and purchases could occur with as little as one or two clicks. The purchases would then be charged on the customers’ next Vodafone bill.

The content was marketed and provided by third parties who paid Vodafone commissions for sales to its customers.

“Through this service, thousands of Vodafone customers ended up being charged for content that they did not want or need, and were completely unaware that they had purchased,” ACCC Chair Rod Sims said.

Vodafone has undertaken to contact potentially affected customers and offer refunds where appropriate. It will also review any complaints and deal with those customers in good faith. 

“Other companies should note, money made by misleading consumers will need to be repaid,” Mr Sims said.

In response to an increase in complaints about the service during 2014 and 2015, Vodafone began phasing out DCB subscriptions in mid-2015, and cancelled its arrangements with certain third party providers of digital content.

However, consumers could still be charged for one-off purchases without any identity verification until March 2018.

Vodafone customers are encouraged to check their Vodafone mobile account and if they believe unauthorised charges were applied, they should contact Vodafone on 1300 650 410. 

This enforcement action follows ACCC proceedings against Telstra and Optus in relation to their DCB services.

Vodafone’s DCB service

Vodafone offered a DCB service from at least 1 January 2013 to 1 March 2018.

The DCB service allowed customers to purchase digital content from third party developers such as games, ringtones and apps (but did not include content acquired from the usual app marketplaces like Google Play or the App Store).

Charges were automatically applied to Vodafone customers’ pre-paid and post-paid mobile accounts.

Vodafone’s current DCB service is only available for a limited amount of content and requires express customer agreement. This service had not been the subject of complaints to the ACCC.

Notes to editors

The undertaking is published on the ACCC's register here: Vodafone Hutchison Australia Pty Limited and will be published on ASIC’s undertaking register.  Vodafone’s compliance with it will be monitored by the ACCC over the next 12 months.

The ASIC Act prohibits misleading or deceptive conduct in relation to financial products and services, such as Vodafone’s DCB service. ASIC has delegated to the ACCC powers and functions under the ASIC Act in relation to financial products and services provided in connection with telecommunications services. The ACCC has accepted Vodafone’s undertaking in accordance with this delegation.

Release number: 
116/19
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