ACCC puts telcos on notice over misleading ads

The ACCC is ramping up its crackdown over false advertising in the telecoms sector and has hinted it may bring court action against executives who knowingly approve misleading advertising.

ACCC Chair Rod Sims noted that as of this month, the regulator has the power to pursue far greater penalties for contraventions of Australian consumer law and “will not hesitate to seek the highest possible penalties”.

The regulator has been investigating Optus, Vodafone and Telstra’s use of the term “unlimited” to promote mobile data plans that are subject to fair use speed caps. This coincides with the lawsuit brought by Optus against Telstra in the Federal Court over the latter's advertising practices.

The investigation found that all three operators were capping usage speeds at 1.5 Mbps after a certain data threshold was reached.

Optus’s terms of use also allowed the operator to deprioritise heavy users during times of network congestion, and Telstra was slowing speeds to below the 1.5 Mbps cap during these busy periods.

The ACCC investigation found that the regulator did not consider the disclaimers qualifying the headline claims of unlimited data to be sufficiently prominent and clear.

Meanwhile, as part of the Optus-initiated court action, the Federal Court had declared that it considers Telstra’s unlimited headline claim to be in violation of Australian consumer law by falsely conveying to customers that the operator was offering truly unlimited services.

Sims said that following ACCC intervention and the court findings, all three mobile operators have stopped using the “unlimited” headline claim in their advertising.

“Telecommunications companies should be wary of using absolute claims like ‘unlimited’ where that does not give a true picture to consumers of what is being offered,” ACCC Chair Rod Sims said.

“We have taken a range of actions against telecommunication companies for misleading consumers. It is about time they showed more respect for their customers and the Australian Consumer Law. With much higher penalties now available for breaches of consumer law, I hope they will take their obligations more seriously. From now on consumer law penalties will seriously affect their bottom line.”

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