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Phone card adverts must show true costs of calls

Phone card adverts must show true costs of calls: Commission

The Commerce Commission has reached a settlement with two Australian-based providers of prepaid calling cards, Cardcall Pty Ltd and Global Card Services Pty Ltd, after an investigation found that hidden costs and conditions meant customers were charged more for calls than they expected.

The investigation found that the companies were likely to be breaching the Fair Trading Act by not disclosing important conditions in their advertising, or only disclosing them in fine print, giving an overall impression that was misleading.

The Commission’s concerns included:

headline prices did not include GST and were only available off peak, and there were extra connection, disconnection and administration fees applied: these facts were not disclosed in advertising, or were only disclosed in the small print.

prices were advertised “per minute” but calls were charged in multiple-minute blocks;

users were charged for using 0800 and 0508 numbers, which most consumers believe are free-phone numbers.

The settlement requires the companies to change their advertising and the text on their cards so that consumers understand the true price of their calls. The companies have also agreed to not use the 0800 or 0508 prefix for calls that customers will pay for.

The Commission had intended seeking an injunction to stop misrepresentations, but withdrew from that course of action when the companies agreed to change their conduct.

The Commission’s Director of Fair Trading Deborah Battell said the settlement would ensure that calling card customers knew the true price and conditions before they bought a card.

“With price differences of a few cents per minute making the difference to consumers, this should be a very competitive market,” said the Commission’s Director of Fair Trading Deborah Battell.

“However, for true competition to occur, consumers need to see accurate headline prices, and be easily able to compare prices and conditions.”

Cardcall markets the cards called Ratesaver, Kiwicall, Go Talk and Daybreak. Global Card Services supplies the cards called Hot, Oasis and In Touch.

Before entering into the settlement, the Commission held a seminar for the industry which has significantly improved compliance among calling card providers. Ms Battell said the Commission would continue to monitor the industry and would be prepared to prosecute card providers who breached the Act.

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