Internet co fined $2 million

Seriously misleading advertising have cost internet retailer TPG a massive $2 million penalty.

The Federal Court has ordered TPG Internet Pty Ltd to pay the $2 million in civil pecuniary penalties for false and misleading advertising and failing to prominently specify the minimum charge in relation to a national advertising campaign following action by the Australian Competition and Consumer Commission.

“This decision should send a strong warning to telecommunications and internet providers that they cannot continue to take risks in their advertising or they could end up in court and be exposed to substantial penalties,” ACCC chairman Rod Sims said in a statement.

It is the latest in  string of actions against telcos, notorious for misleading consumers with catchy headlines which fail to reveal the true cost of the service or relevant conditions. Foxtel, Dodo and Optus have all been on the receiving end of ACCC action – though none faced anywhere near the penalty handed down on TPG.

“The ACCC is committed to taking a hard line to secure a culture of compliance by telecommunications providers and improve marketing in the telecommunications industry. The ACCC will continue to take court action in order to achieve this,” said Sims.

The orders follow the Federal Court finding that TPG’s $29.99 Unlimited ADSL2+ campaign was false and misleading because the ADSL2+ plan was only available when purchased with home line rental from TPG at an additional cost of $30 per month. The Federal Court also found that the earlier advertisements did not prominently specify the minimum charge and were misleading for not disclosing additional up front charges.

In his reasons for judgment Justice Murphy noted that “the conduct was seriously misleading and affected a diverse class of users and potential users of broadband services”. His Honour further noted that TPG understood “that there was a risk that its conduct might constitute misleading conduct” and that TPG “should have adopted a more cautious approach”.

Justice Murphy considered that a sizeable penalty was “necessary to make it clear to TPG and to the market that the cost of risking a contravention cannot be regarded as merely an acceptable cost of business”.

TPG was also ordered to publish corrective notices, to maintain a trade practices compliance program for three years and to pay the ACCC’s costs. The court also imposed injunctions restraining TPG from engaging in similar conduct in future.

The ACCC says it remains concerned about conduct in the telecommunications sector in relation to the proper disclosure and clarity of key terms and conditions to consumers. Recent actions in the telecommunications sector have included issuing infringement notices against:

  • TPG in March 2012 totalling $13,200 in relation to its advertising of ‘free 500 VoIP minutes’ offer.
  • Foxtel in March 2012 totalling $42,600 in relation to its advertising of its ‘Christmas Sale’.
  • Dodo in January 2011 totalling $26,400 in relation to pricing of its ‘unlimited’ broadband plans.
  • Optus in May 2011 totalling $178,200 in relation to its ‘Max Cap’ plan advertising.
  • In March 2012, the Full Federal Court also imposed a pecuniary penalty of $3.61 million on appeal, finding that Optus engaged in misleading and deceptive conduct in relation to the speed of broadband plans.

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