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Vodafone fined $400K in first of six Fair Trading Act claims

Vodafone fined $400K in first of six Fair Trading Act claims

By Paul McBeth

Aug. 12 (BusinessDesk) – Vodafone New Zealand Ltd., the country’s biggest mobile phone operator, has been fined $400,000 for misleading customers in the first of six prosecutions by the antitrust regulator.

The phone company was fined in the Auckland District Court today after it pleaded guilty to breaching the Fair Trading Act over the promotion of its Vodafone Live! Service. It will defend the remaining five charges. The Commerce Commission claims Vodafone misled customers over certain promotions between 2006 and 2009.

“Vodafone’s shortcomings must, in my view, have had a very real impact on many consumers or customers,” Judge Roderick Joyce said in his sentencing, published in a Commerce Commission statement. “The money sums in question might have meant nothing to someone of considerable means, but pay-as-you-go customers are surely not in that category.”

Businesses face fines of up to $200,000 per charge for breaching the Fair Trade Act, and the courts can impose bigger penalties where more than one charge is laid.

Earlier this month, Vodafone settled a long-running dispute with rival Telecom Corp. and the regulator over the fees it paid for rural telephone services under the now defunct Telecommunications Service Obligation.

Vodafone shed 26,000 customers in the June quarter, having the fewest customers on its books for a year at 2.458 million people.

Commerce Commission competition manager Stuart Wallace said Vodafone had a “serious design flaw which resulted in many customers incurring unwanted costs” and that the phone company was slow to response to the problem.

“Vodafone paid insufficient attention to how customers would be likely to use the service and the language used to promote the service blurred the line as to what was actually free,” Wallace said. “Providers need to be certain that their marketing and promotions do not mislead consumers, who often have no way of easily verifying the claims being made.”


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