Commerce Commission warns telcos over Fair Trading breaches

Commerce Commission warns telcos over Fair Trading Act breaches

By Rebecca Howard

Aug. 14 (BusinessDesk) - The Commerce Commission has sent warning letters to four telecommunications companies about specific conduct it considers breached the Fair Trading Act and said it is continuing to investigate further potential issues in the sector.

The letters were sent to MyRepublic, Two Degrees Mobile, Spark New Zealand and Vodafone New Zealand.

“As we noted when announcing our 2017/18 priorities, the telco sector continues to generate a high volume of consumer complaints, despite previous compliance and enforcement work by the Commission,” commissioner Anna Rawlings said in a statement.

Rawlings said the commission is continuing to investigate further potential issues in the sector, including incorrect billing, failures to identify the subscription nature of mobile add-ons, incorrect calculation of broadband usage, unfair contract terms and representations concerning the nature and availability of internet services.

According to the commission, MyRepublic promoted its one gigabit per second service up to two months before it was actually available, indicated customers on its GAMER broadband service would not experience lag or latency when they could experience lag or latency caused by third party servers, and made incorrect representations that consumers’ rights of cancellation under the uninvited direct sales provisions of the Fair Trading Act ceased to apply once MyRepublic had commenced the service.

It said that 2degrees had made misleading representations about the price of its unlimited broadband plan by not identifying or inadequately disclosing the additional cost of a modem and its delivery, while Spark made misleading representations that Vodafone’s 2G network was imminently closing in the marketing of Spark’s Skinny Mobile service.

Vodafone, meanwhile, made misleading representations in the promotion of 12 month broadband plans bundled with “free” goods or services when, in order to receive the “free” goods or services, the consumer was required to pay additional fees or to take additional services and on some occasions, a monthly headline price was advertised, but that price did not include the additional fees to be paid in order to receive “free” goods or services, the regulator said.

The warning letters form part of the commission's "enforcement guidelines" and are considered a low-level response. In the guidelines, the commission said that it may issue a warning letter as an alternative to litigation following an investigation.

“The purpose of a warning letter is to inform the recipient of our view that there has been a likely breach of the law, to prompt a change in the recipient’s behaviour, and to encourage future compliance,” the commission said. It also said the letter could advise the recipient that if the conduct is ongoing it will be at risk of further investigation and potential legal proceedings.

The regulator noted it has taken a number of prosecutions or actions against telecommunications companies in recent years.

(BusinessDesk)

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