Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Vodafone pays out in Fair Trading Act case

The Vodafone building on the corner of Halsey St and Fanshawe St in central Auckland. Photograph by Brett Phibbs
The Vodafone building on the corner of Halsey St and Fanshawe St in central Auckland. Photograph by Brett Phibbs

Vodafone has settled a case with the Commerce Commission and paid out almost $270,000 to 11,000 customers who signed up to a mobile broadband promotion.

The case concerned Vodafone's "Broadband Lite" service, which let customers use the internet on their mobile phone.

Between July 2009 and September 2011 Vodafone offered this service free for three months to some customers and 146,000 people signed up to it.

Once this free period expired, the service cost $10 a month and Vodafone's terms and conditions said customers would be sent a text message to reminding them of the need to opt-out of the service if they did not wish to be charged.

After investigating complaints, the commission decided some customers were not properly advised of the terms of the deal.

Almost 8000 customers did not receive a text reminding them to opt-out of the service and 3000 customers cancelled the service but were still charged for it, the Commission said.

The Commission believed the promotion breached the Fair Trading Act but has settled the matter with Vodafone, which has made a $268,231.38 payout to affected customers.

In a settlement agreement, Vodafone agreed that it was likely to have breached the Act.

The Commission said the telco "took active steps to identify and rectify the issues" once the regulator made enquiries.

"In reaching the decision to settle, we took into account the fact that Vodafone put things right as soon as it became aware of the problems. Nonetheless, the case highlights the potential problems with 'opt-out' sales promotions," said Commerce Commission Consumer Manager Stuart Wallace.

"Such promotions require the consumer to take an active step in order to not buy something. Customers can be locked into a deal that they don't want and maybe did not understand. Unless the 'opt-out' condition is very clearly disclosed, these promotions have a high risk of being misleading and in breach of the Fair Trading Act," Wallace said.

Numerous Vodafone's promotion have come under fire from the Commerce Commission over recent years in Fair Trading Act cases.

In September 2012, it was fined $960,000 for misleading advertising over a free air-time deal and the coverage of its wireless broadband network. In November 2011 it was fined $81,900 for misleading customers over "$1 a day" mobile data charges and in August 2011 it was fine $400,000 for misleading customers over its Vodafone Live! service.

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