Vodafone fined for misleading customers

WILLIAM MACE
Last updated 13:26 10/09/2012

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Vodafone's fine of $960,000 for "gross carelessness" in misleading the public should act as a deterrent to others creating borderline advertising campaigns, the Commerce Commission says.

The latest conviction takes Vodafone's total bill for using misleading advertising to almost $1.5 million, the highest ever fine for one defendant.

In July the telecommunications company pleaded guilty in the Auckland District Court to 11 representative charges brought by the commission of misleading consumers.

Judge David Harvey cut the penalty from a $1.2m starting point to $960,000 to include a 20 per cent discount for early guilty pleas by Vodafone.

The Commerce Commission's competition manager Stuart Wallace said the decision showed that companies needed to ensure their "headline message" was not misleading.

"In issuing these penalties the court has recognised that Vodafone's actions caused significant detriment to consumers and competitors," Wallace said.

"The commission is hopeful that the outcome of the case will provide a significant deterrent to others."

Vodafone's marketing director Greg Campbell said the company accepted "we got some things wrong".

"We did not set out to mislead anyone and we apologise unreservedly," he said.

"Unfortunately, we can't turn back the clock on some things that happened four years ago, but since then we have been focused on ensuring our communication is clear and on giving our customers a great experience with Vodafone."

Harvey said the latest charges were "the most serious" of three sets of charges which have been through the court in the past year.

The charges related to a promotion in which Supa Pre Pay customers were offered a $10 credit to their account if the registered their details at a Vodafone website.

However the website was faulty and many customers could not complete the registration process and did not get their $10 credit.

The problems providing the free $10 credit should have been taken more seriously but instead the failures were "repeated and persistent in the face of complaints", Harvey said.

The promotion ran for 16 months despite Vodafone knowing about the problems with the registration website.

Harvey said Vodafone benefited by $450,000 from people who joined the service but did not take advantage of the $10 credit, although many did not even attempt to redeem the offer.

Other charges related to Vodafone's claim to have the largest 3G mobile data network in the country but, while it had the most customers, it did not have the widest network coverage.

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Vodafone's "Broadband Everywhere" advertising also gave the impression that its mobile broadband service could be used everywhere in the country when it only covered 1 per cent of the geography and around 42 per cent of the population at the start of the promotion.

Vodafone has previously been fined $400,000 for misleading customers about the pricing details of its Vodafone Live "walled garden" of online content and $81,900 for misleading customers about the pricing of its "$1 a day" data deal.

Harvey said the offending had distorted the data market when it was in its infancy and possibly disillusioned customers about the clarity of data offers.

- BusinessDay.co.nz

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