ACCC warns telco marketers over false advertising

Chair of the Australian consumer watchdog threatens bigger fines and court action against telcos making misleading claims about services

The chairman of Australia’s consumer watchdog has come out swinging against marketers operating in the country’s telecoms sector, threatening court action against those who knowingly approve misleading advertisements.

Australian Competition and Consumer Commission chair, Rod Sims, said telcos are on notice for false and misleading advertising, and has warned them to ensure advertising is both clear and transparent or risk facing court action as well as higher penalties if they don’t.

As of 1 September, ACCC has been given the power to impose higher penalties against those breaches the Australian Consumer Law to the greater of $10 million, three times the value of the benefit received, or 10 per cent of annual turnover in the preceding 12 months. Individual penalties also rose from $220,000 to $500,000 per breach .

The move comes after the ACCC launched investigations earlier this year into use of the term ‘unlimited’ in mobile data plans advertised by Optus, Vodafone and Telstra. It came at the same time as Optus lodged private litigation against Telstra in the Federal Court for referring to its mobile data plans as offering ‘unlimited’, alleging such plans were not in fact unlimited at all.  

The ACCC noted all three major players - Optus, Vodafone and Telstra – have advertised mobile data plans as ‘unlimited’ yet each has imposed certain restrictions on services in cases where a data or speed threshold is reached. Optus, for example, imposes a 1.5Mbps speed restriction on tethering, streaming and downloads for users on its ‘unlimited’ plan, while heavy data users could also be deprioritised during congestion across the network.

Vodafone, meanwhile, provides an initial data allowance at usual speeds under its ‘unlimited’ plan, yet also caps speeds at 1.5Mbps once this threshold is reached, while Telstra offers 40GB at usual speeds under its ‘unlimited’ offering but slows services to 1.5Mbps and even further during busy periods.

According to the ACCC, each headline claim in most cases qualified with disclaimers but these were not sufficiently prominent or clear for consumers to understand either their existence or impact.

In addition, the Federal Court has found Telstra’s tagline, ‘One word for Australia’s best mobile network. Unlimited’ was misleading and deceptive and falsely conveyed to consumers that the telco giant provided plans that gave consumers unlimited usage across the network when it in fact was always tied to limitations or exclusions.

Since the Federal Court findings and the ACCC’s investigations, all three telcos have ceased using the term ‘unlimited’ in their mobile data services advertising.

“Telecommunications companies should be wary of using absolute claims like ‘unlimited’ where that does not give a true picture to consumers of what is being offered,” Sims stated.

“We have taken a range of actions against telecommunication companies for misleading consumers. It is about time they showed more respect for their customers and the Australian Consumer Law.” 

 

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu  

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

How to create profitable pricing

How do we price goods and services? As business leaders, we have asked ourselves this question since the history of trading.

Lee Naylor

Managing partner, The Leading Edge

Sport and sponsorship: The value of event sponsorship

Australia’s cricketers captured the nation’s attention during their recent run to the semi-final of the ICC Men’s World Cup. While the tournament ultimately ended in defeat, for over a month it provoked a sense of belonging, hope and empowerment for millions of people across Australia. Cricket, and sport in general, has a near-unique ability to empower individuals, irrelevant of their background, demographic or nationality.

Nikhil Arora

Vice-president and managing director, GoDaddy India

AI ethics: Designing for trust

As artificial intelligence (AI) becomes much more prevalent and increasingly a way of life, more questions are being asked than answered about the ethical implications of its adoption.

Katja Forbes

Founder and chief, sfyte

I live the best deals at LA Police Gear.

Tyrus Rechs

6 Ways to ramp up Social Media to Your Web Design

Read more

Its absolute over priced acquisition. The CEO, must be fired for this all cash transaction. Absolutely no justification for prospective P...

about_face

Analysts question long-term play of SAP's acquisition of Qualtrics

Read more

Very well written Nikhil! Indeed this is a big ticket investment, but the impact on brand, sales and employee motivation should make it w...

Yugal Sachdeva

Sport and sponsorship: The value of event sponsorship

Read more

As someone with both experience in marketing and working with UiPath both, I can say that I cannot wait to see more marketing processes u...

CiGen RPA

What robotic process automation can do for marketers

Read more

10 Business applications of virtual reality (VR) technologyhttps://www.sendiancreation...virtual reality

sendian creations

The new wave of VR applications

Read more

Latest Podcast

More podcasts

Sign in