Spark fined $675,000 for misleading customers

Spark fined $675,000 for misleading customers

By Jenny Ruth

April 12 (BusinessDesk) - Telecommunications company Spark New Zealand has been fined $675,000 in the Auckland District Court for breaching the Fair Trading Act.

Spark had pleaded guilty in a previous court hearing to charges brought by the Commerce Commission after the company over-charged customers who terminated their contracts by an aggregate $6.6 million or an average of $90 per customer.

Spark had also offered new customers a $100 credit to join it and to subscribe to a particular broadband plan but had given prospective new customers the impression that they could sign up online when the credit was only given to new customers who phoned Spark.

“Customers rely on companies to invoice them accurately. Overcharging even a small amount to individual customers can result in businesses receiving large sums of money that they are not entitled to,” commissioner Anna Rawlings says.

“Spark failed to take necessary steps to ensure its invoices were accurate. More than 7,000 customers still remain out of pocket, despite refunds being made to a large number of others who were affected,” Rawlings says.

On the joining credit offer, she says it is vital businesses clearly disclose any conditions to such offers.

In levying Spark’s fine, Judge Russell Collins said that the breaches are commercial offending "and commercial offending must be met with commercial penalties.”

As well as today’s sentencing, the commission has warned Spark about its failure to correctly apply a $300 welcome credit to the accounts of eligible customers.

Spark had identified that issue, self-reported it to the commission and had subsequently identified all affected customers and correctly applied the credit to their accounts.

“This is another example of the care businesses must take to ensure their billing and invoicing systems are accurate and that customers are not left out of pocket,” Rawlings says.

Spark says it “fully cooperated” with the commission and that the offences “resulted from mistakes with no malicious intent."

"Spark sincerely regrets the impact on customers and has taken all practicable steps to refund those customers who were billed incorrectly or did not receive their welcome credit,” the phone company says in a statement.

“The court has taken Spark’s conduct, including its guilty plea, into account when determining the financial penalty,” it says.

Spark says it has fully refunded “the vast majority” of former customers and has sent a letter or email to the last known address of former customers with a credit balance of $1 or more. Any former customer who thinks they may be eligible for a refund can apply for one.

Spark says the fine won’t impact its full-year 2019 guidance. In February, Spark said it expects operating earnings of $1.065-$1.095 billion for the year ending June, up from $981 million last year.

(BusinessDesk)

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