Call to get tougher on Telecom breaches

BY CLAIRE MCENTEE

Consumer groups warn that harsher court penalties may be needed to prevent Telecom breaching the Fair Trading Act after the company admitted yet another violation.

Telecom has paid about 130,000 broadband customers $9.5 million in compensation after wrongly billing them for dial-up internet connections between 1999 and 2006.

The breach – one in a string of offences in recent years – has prompted the Commerce Commission to express concern about Telecom's chronic infringing.

Since 2003 Telecom has been the subject of Fair Trading Act convictions, settlements or warnings on at least eight occasions – including a High Court conviction and $500,000 fine in December for making misleading claims about its 2006 Go Large broadband plan.

Consumer NZ chief executive Sue Chetwin said it was appalling Telecom had continued to mislead its customers, and harsher penalties for the company might be needed.

"Maybe there is an opportunity for the courts to come down harder on them.

"This is a very big public company ... and it doesn't seem to be learning."

Most of the breaches occurred under the previous Telecom management, she said. "You'd have to hope in the past couple of years things have started to change."

Telecommunications Users Association chairman Chris O'Connell said the breaches were damaging Telecom's brand and it might be a good idea for the company to come clean about any other offences and have them dealt with quickly.

"If it keeps getting drip-fed out like this then that's bad for Telecom.

"I have sympathy for the current management, who are trying to run a clean shop ... but a message does have to go out that this isn't acceptable.

"You could start hitting them with the full power of the Fair Trading Act on every breach. I suspect [the penalties] are going to get ramped up."

Consumer Affairs Minister Heather Roy said Telecom's track record was concerning and urged it to make compliance with the act a top priority.

Telecom spokeswoman Emma-Kate Greer said it regretted its breach of the act and had made changes to ensure a similar error did not occur again.

"We take compliance very seriously, which is why we have been on a concerted drive to resolve this historic error and take our compliance framework and processes to best-practice levels."

Telecom had been unable to trace about 1400 of the 130,000 customers affected, but had credited their accounts.

The company said last week that it would reimburse 150,000 broadband customers after a technical fault over-calculated customers' broadband usage through November and December.

The customers were either overcharged or had their internet connection reduced to dial-up speed.

Telecom has been the subject of at least eight Fair Trading Act convictions, settlements and warnings since 2003:

October 2003: Fined $10,000 plus costs in Wellington District Court for misleading consumers about cellphone plans in a 2001 advertising campaign.

October 2005: Agreed to reimburse customers $54,000 after charging mobile customers peak rates for off-peak calls in 2001 and 2002.

October 2005: Convicted and fined $4000 for failing to disclose costs associated with a telephone information service in 2001.

July 2006: Fined $45,000 in Wellington District Court and ordered to pay more than $3000 in costs for misleading customers about a new mobile phone deal.

October 2006: Agreed to reimburse customers about $3.3 million after a billing fault saw them charged twice.

March 2007: Warned by the Commerce Commission that its "faster cheaper" broadband marketing campaign risked breaching the act.

March 2009: Convicted and fined $45,000 in Wellington District Court for wrongly misrepresenting its prices, and claiming its billing systems had been approved by the commission. Also paid $10,000 in costs.

December 2009: Fined $500,000 in Auckland District Court for misleading customers about the speeds available on its Go Large broadband plan.

- © Fairfax NZ News