Telstra has paid a $102,000 penalty after the ACCC issued an infringement notice over the telco’s ‘misleading’ price claims made in an iPhone 6 advertisement that appeared in The Age newspaper on 27 September 2014.
The A3-sized ad featured a large photo of the Apple iPhone 6 and advertised Telstra’s iPhone 6 and phone plan bundle for $70 a month when consumers were also required to pay and extra $11 per month for the handset. The advertisement only disclosed the additional payment of $11 and the total monthly cost of $81 in fine print.
The ACCC deemed that Telstra’s advertisement misrepresented the price of the phone and phone plan bundle to consumers, a contravention of section 29(1)(i) of the Australian Consumer Law.
“Consumers should be able to understand the true cost of an advertised product so they can make informed purchasing decisions,” ACCC chairman Rod Sims said.
“Businesses must be careful about using attention grabbing headline prices to ensure that their advertisements do not mislead consumers about the actual price they will have to pay. This is especially the case for bundled goods and services like phones and plans.
“Advertising that is clear allows consumers to make informed purchasing decisions and improves competition as it gives other businesses the opportunity to compete fairly,” Sims said.
In response to the penalty, Telstra released the following statement:
We were surprised to receive the infringement notice, as our ads prominently stated the mobile plan cost, the handset cost and the total minimum cost as legally required, and were in line with the way many others in the industry advertise mobile plans with handsets. The ad in question was displayed in a full newspaper page so all the text was much larger.
Even though we are strongly of the view our ads complied with the law, we have paid the notice. In addition, we’ve made some changes to our advertising to make it even clearer to customers what they will pay each month for a plan and handset. We now consider this matter closed.
We think there is scope for these sorts of issues to be resolved in the future through constructive engagement between industry and the regulator, rather than through the use of formal enforcement mechanisms.
Telstra avoided a fine from the ACCC earlier this year when an agreement was reached, to improve its compliance with Australian Consumer Law after the watchdog received complaints that the telco misled consumers about their consumer guarantee rights in relation to faulty mobile phones.