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Telecom Mobile fails to give credit where it;s due

Media Release

Issued 21 July 2006/011

Telecom Mobile fails to give credit where credit due

Telecom Mobile Limited has been fined $45,000 and ordered to pay over $3,000 in costs in the Wellington District Court today for breaching sections 11 and 13(g) of the Fair Trading Act, after misleading customers about a new mobile phone deal.

Telecom Mobile began a 027 direct marketing campaign to 7,107 existing customers in March 2005. The letter and accompanying advertising offered the customers an account credit as well as a discounted mobile phone if they upgraded to a new 24 month plan on the 027 network.

The amount of account credit offered varied from $50 up to $250, depending on whether the customer was on a business or personal plan. However, some customers later realised they were not granted an additional account credit as well as the mobile phone reduction as they had initially been led to believe.

When Telecom Mobile became aware of customers’ concerns they instructed call centre staff to honour the customers’ interpretation, but this information was not passed on to customers changing plans online or through retail outlets. This information was also not passed on to the central billing system, so customers who forwarded their accounts to be credited with the agreed amount did not receive it.

Director of Fair Trading Deborah Battell welcomed the penalty: “The Commission is committed to ensuring that consumers have the ability to make decisions that are right for them and competitors the opportunity to compete fairly. This means ensuring that all parties are making decisions based on accurate information.

“In this case, consumers ended up switching to another Telecom network thinking they were getting a special deal. Not only were consumers misled about the offer but competitors who advertised potentially competing offers with correct prices also may well have been disadvantaged.”

Ms Battell went on to add: “Telecom has already had three convictions as well as prior warnings and settlements. It was clear at the time we made the decision to prosecute that it still had a way to go before all parts of the corporation understood the need to get things right. The Commission acknowledges that Telecom has made significant improvements since that time but considers it still has a way to go before it can demonstrate that it has a strong culture of compliance with the Fair Trading Act.

“The Commission would now like Telecom to focus on getting its advertising right.”

Background

Section 11 of the Fair Trading Act says that no person shall mislead the public as to the nature, manufacturing process, characteristics, suitability for a purpose or quantity of services.

Section 13(g) says that you should not make false or misleading representations with respect to the rice of any goods or services.

ENDS

Commission media releases can be viewed on its web site www.comcom.govt.nz

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