Vodafone refunds $35,000

Vodafone refunds $35,000

- message to all advertisers, inadvertently breaching Fair Trading Act is not a defence

Responding to a Commerce Commission investigation, Vodafone New Zealand Limited has refunded a total of $35,000 to customers that it had overcharged for cellphone text messages.

Commission Chair John Belgrave said that the Vodafone case is a strong message to all advertisers: inadvertent breaches of the Fair Trading Act are not protected from Commission investigations and enforcement action.

“The Act puts the onus on advertisers to ensure that their message is correct,” Mr Belgrave said. “If claims are inadvertently false or misleading, then they can still breach the Act.”

Mr Belgrave said that between May and July last year, Vodafone advertised on television, on its web site and in newspapers that “a text message is only 20 cents to send to another mobile on the Vodafone network.” The true cost was 20.25 cents.

“Overcharging consumers 0.25 cents per text message for three months gave Vodafone an additional $35,000,” Mr Belgrave said.

“This case shows very clearly how a small detriment to each individual consumer—just a quarter of a cent per call—can become a big total detriment to consumers, and potentially a big gain to a trader.”

Vodafone told the Commission that the overcharging was an inadvertent mistake in rounding to allow for GST.

“Vodafone has rightly accepted responsibility for that mistake,” Mr Belgrave said, “and, as a result of the Commission’s investigation, has taken action to put it right.”

The Commission ended this investigation with a settlement with Vodafone, including signed undertakings from Vodafone:

acknowledging that it made false or misleading claims about prices and breached the Act
that it has ceased overcharging for text messages
that it has provided credits and free air time as refunds to customers, and
that the Commission can take further action if the settlement is not honoured.

Background

Section 13(g) of the Fair Trading Act prohibits false or misleading claims about prices. Courts can impose fines of up to $100,000 on a company, fines of up to $30,000 on an individual and a wide range of orders and injunctions.

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