$478K in refunds for Slingshot and Orcon customers over undisclosed break fees

Image / 123rf

Some 2636 Orcon and Slingshot customers will be refunded a total of $480,000 paid in “inadequately disclosed” break fees or penalty payments for cancelling 12 or 24-month contracts early.

The payments, which range from $149 to $250 per customer, will be made over the next six months.

They follow High Court action brought by the Commerce Commission in 2021 against the two internet service providers, plus power retailer Switch Utilities, over alleged Fair Trading Act breaches between 2014 and 2020.

For most of that period (and up until July 2022), all three firms were owned by Australia’s Vocus Group.

In a November 2022 High Court judgment, Justice Graham Lang said unsolicited sales approaches had been made to land Orcon, Slingshot and Switch customers.

In that cold call context, any cancellation fee must be displayed on the front page of a sales agreement, Justice Lang said. The providers had not adequately fulfilled their disclosure obligations.

A Commerce Commission investigation found the fixed-term contracts included a clause stating if customers cancelled their contracts early, a termination fee might apply. However, the fee amount was not disclosed.

Following the November 29 ruling, a settlement was reached with the ComCom for the refunds announced today.

ASX-listed Vocus Group was bought by another Australian firm, Voyage Australia, in September 2021. Voyage - not to be confused by the Seeby Woodhouse-owned Voyager - is owned by Australia’s largest superannuation fund, AwareSuper, and Macquarie Infrastructure.

In a deal that closed on July 1 last year, Voyage bought 2degrees from its US parent Trilogy.

2degrees was then merged with Vocus Group NZ (grading as Orcon Group) to create the company trading as 2degrees today.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.