Xtra fined $45,000 after misleading customers

Xtra call centre staff claimed Commerce Commission endorsement of the ISP's activities, when none existed.

Telecom's Xtra has been fined $45,000 and ordered to pay $10,000 in costs for breaching the Fair Trading Act by lying to its customers.

Xtra, New Zealand's largest internet service provider, was convicted in the High Court in Wellington today on three charges of misrepresenting "that its pricing, conditions attached to its services or its billing systems had been approved by the Commerce Commission."

The commission said the case stemmed from consumers who challenged Xtra's charges or conditions.

The complaints were laid with the Commission from September 2005 to November 2006.

In one case, Xtra had told a customer that the Commerce Commission had tested its billing systems. Another was told that she could not access her Xtra internet account from another internet service provider's connection
because of a decision by the 'Telecommunications Commission'.

A third was told that Xtra's pricing was "in line with Commerce Commission guidelines."

None of these statements were true.

"This case serves as a reminder to all businesses that they cannot claim endorsement or approval that they do not have," said Stuart Wallace, Commerce Commission's Christchurch Fair Trading Manager.

Telecom spokesman Mark Watts said the company "dropped the ball".

"We've acknowledged that and we've been convicted appropriately," Mr Watts said.

He said training for call centre staff is ongoing and it has been tightened since the offending calls.

It's not the first time Xtra has run foul of the Commission. In February 2005 it warned Telecom about similar conduct.

As part of this warning, Telecom was told it needed to ensure its staff were "fully aware of the consequences of claiming any actual, or implied approval by the commission."

It was warned that any such claims in the future could result in more serious enforcement action.

"The Court found that Telecom had taken no effective action to avoid further similar breaches after receiving the Commission's initial warning."

Judge Broadmore noted that "Telecom's training programme at the time of the offences had fallen a long way short of what was reasonable given the high relevance of the Fair Trading Act to Telecom, the company's previous history with the Commerce Commission and the Commission's specific warning."

"Businesses need to ensure that training, policies and procedures are in place so that their staff are always giving consumers accurate information," said Wallace.

"Consumers rely on accurate information in order to be able to make informed decisions. Misleading information can also harm other businesses who are complying with the law."

See a full copy of the judgement here

- NZ HERALD STAFF