Optus hit with largest ever penalty for misleading consumers

Stuart Corner
Thursday, 07 July 2011 16:33

IT Policy - Regulation

The Federal Court has ordered Optus to pay $5.26m in penalties for misleading customers in the advertising of its fixed network broadband plans, following an action brought against Optus by the ACCC.

According to ACCC chairman, Graeme Samuel, "The court has just handed down the largest civil penalty for a consumer protection matter" said today. This is a great result for consumers and the ACCC. The court is punishing a company that disregarded the law and misled consumers."

He added: "The entire telecommunications industry needs to sit up and take notice. This conduct is not acceptable, and the ACCC will seek the harshest penalties the law allows."

While the surprisingly large penalty might be painful for Optus, the widespread adverse publicity generated by the size of the penalty is likely to provoke even more angst and, hopefully, act as a more powerful deterrent against any similar practices in the future.

The penalty was imposed for Optus' 'Think Bigger' advertising campaign launched in April 2010 and the 'Supersonic' campaign of August 2010. Optus advertised these plans through a number of media, including television, newspapers, billboards and direct marketing through the yellow envelope.

They offered broadband separate peak and off-peak download quotas, but once the peak download quota had been exceeded bandwidth was throttled to 64kbps during both peak and off peak periods.

The ruling represent the fourth successful attempt by the ACCC to pull Optus into line over its advertising in recent months. In February this year, the Federal Court found that advertisements published by Optus that promoted its broadband plans as 'unlimited' were misleading and deceptive.

In May this year, the ACCC issued and Optus paid 27 infringement notices totalling $178,200 for alleged misrepresentations concerning its 'Max Cap' advertisements for its prepaid mobile phone services. In January this year, Optus provided the ACCC with court enforceable undertakings in relation to alleged misrepresentations to consumers about their statutory rights in relation to faulty mobile phones.

And, in June last year an Optus subsidiary, Prepaid Services, was found guilty along with Boost Tel of misleading conduct and of making false representations in regard to the value, price and benefits of their phone cards.

These practices would appear to be in clear breach of enforceable undertakings given by all three mobile operators to the ACCC in 2009 that, according to the ACCC, commited them to "the basic principle of truth in advertising" and that included making claims relating to price, data allowances, total time allowances, speeds and network coverage where the claims could not generally be sustained for all consumers.