Trustpower punished for misleading consumers on broadband deal

Between March and July last year, Trustpower promoted a $49 a month for 12 months unlimited data broadband plan. However, the plan wasn't available to everyone. Photo / 123rf.com

Trustpower has been hauled through the courts and fined $390,000 for misleading consumers over a campaign for an unlimited broadband deal.

Between March and July last year, Trustpower promoted a $49 a month for 12 months unlimited data broadband plan, under the campaign theme: "Good things happen when power and broadband get together."

The campaign ran on television and online advertisements as well as billboards.

However, the $49 price was available only to customers who signed up for power and broadband at the same address on a 24-month contract term.

For the last 12 months on the contract the cost jumped to $79 a month and if a customer wished to cancel the contract at any time during the 24-month period they would incur exit fees.

The leap in pricing was run in small print on the billboards and the television commercials.

In August, the Commerce Commission filed seven charges in the Auckland District Court under the Fair Trading Act which Trustpower plead guilty to at the first opportunity.

At sentencing this afternoon, counsel for the Commerce Commission Ben Hamlin said "to be blunt" the deal should have been advertised as $64 a month for 24 months.

"It is the giving in the big print and the taking away in the fine print which is what concerns the Commission."

Hamlin said the fine print was run during the television commercials during a voice-over and as fireworks appeared on the screen.

"It's difficult to distract a customer more ... than setting off fireworks in the background."

Billboards were often viewed by people driving or hurrying past, he said.

Counsel for Trustpower, Oliver Meech, said the company had no intent to mislead consumers but it regretted and apologised "for any consumer confusion".

Meech submitted Trustpower had fully co-operated with the Commission's investigation, plead guilty at the earliest opportunity and sought to have the matter dealt with as quickly as possible.

Judge Rob Ronayne said it was "a case of serious carelessness" and while he credited Trustpower for its apology and co-operation, he needed to impose a sentence which would be a deterrent.

He fined Trustpower $390,000 in total for the seven charges.

Consumer New Zealand welcomed the "substantial fine" and chief executive Sue Chetwin hoped it would act as a deterrent for other utility companies.

"They think that they can say anything really but what they're saying isn't true."

Chetwin said it was "marketing 101" that you couldn't promise a consumer something which you couldn't deliver.

Earlier this year, the Commerce Commission also filed proceedings against Vodafone NZ for misleading customers on its 'Red Essentials' mobile plan in 2014 to the tune of $90,000.

The regulator said Vodafone didn't accurately apply a $10 discount to customers who signed up to the plan from its introduction through until December 2014, meaning misleading invoices were sent to about 15,000 customers, who were overcharged by about $90,000.

Following the commission's investigation, Vodafone refunded about 98 percent of affected customers, the regulator said.