On false and misleading advertising.
The ACCC has put telecommunications companies on notice to ensure their advertising is clear and transparent or face court action from the regulator. ACCC chair Rod Sims said there are also higher penalties and warned that the ACCC may bring proceedings against executives who knowingly approve misleading advertisements.
Earlier this year the ACCC began investigating Optus, Vodafone and Telstra’s use of the term ‘unlimited’ to promote mobile data plans, concurrent with private litigation brought by Optus against Telstra in the Federal Court.
Between March and June 2018, Optus, Vodafone and Telstra advertised mobile data plans with a headline claim of ‘unlimited’ mobile data, but the services had speed caps imposed on particular uses or after a certain data threshold was reached, among other limitations:
The headline claims were, in most cases, qualified with disclaimers that were not sufficiently prominent or clear to explain to consumers the existence and impacts of the limitations, in the ACCC’s view.
The Court considered Telstra advertisements with the tagline “One word for Australia’s best mobile network. Unlimited” and found these were misleading or deceptive in contravention of the Australian Consumer Law (ACL). The Court also found they falsely conveyed to consumers that Telstra provided plans offering unlimited usage of its mobile network when in fact its services, including mobile data services, were always subject to use limitations and exclusions.
Following the Federal Court’s findings and the ACCC’s interactions, all three retailers ceased using the headline claim of ‘unlimited’ to advertise their mobile data services.
“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 said. “With much higher penalties now available for breaches of consumer law, I hope they will take their obligations more seriously. From now on consumer law penalties will seriously affect their bottom line, and we will not hesitate to seek the highest possible penalties.”
Penalties for contraventions of the ACL increased on September 1 to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of the annual turnover in the preceding 12 months. Penalties against individuals under the ACL also increased from $220,000 to $500,000 per breach.