Spark faces 11 charges from Commerce Commission

Spark managing director Simon Moutter said he was disappointed by the Commerce Commission's decision to institute legal action. Photo/File.

New Zealand's competition watchdog has filed 11 charges against Spark, alleging the telco misled customers.

The charges were filed in Auckland District Court by the Commerce Commission under the Fair Trading Act and cover the period 2 June 2014 to 7 December 2017.

The Commission says the charges arose from the following three issues:

• Spark overcharged customers for broadband data when a fault in Spark's broadband network misrecorded customer data usage.

• Spark sent letters offering new customers a $100 account credit for subscribing to a particular broadband plan but failed to mention the offer could only be redeemed by phoning Spark. The offers allegedly created the impression that customers signing up online would receive the credit, when they would not.

• From 2 June 2014, Spark's terms and conditions said charges would stop 30 days after the customer gave notice to terminate their contract. However, the Commission alleges that the customer's final bill included charges for the entire next monthly billing period regardless of when the Spark service stopped.

Spark said it had already applied credits to the accounts of all impacted customers and, for former customers, has made extensive efforts to return all money owed so they receive the benefit of their credit.

While Spark has already refunded many of these former customers over the past 12 months, it has been seeking to reach more of them as part of its "Make Sure You Get What's Yours" consumer campaign launched in May 2018. Through this campaign, Spark has so far returned over $1.1 million to customers in credits owing.

"These were all system-based errors caused by genuine mistakes with no malicious intent involved on the part of Spark. That being said, we are deeply disappointed that these issues have affected our customers," said Spark's managing director Simon Moutter.

Given all the steps Spark has taken to rectify the matters, Moutter said he was disappointed in the Commission's decision to pursue legal action.

"Our preference has consistently been to settle these matters and avoid court proceedings," Moutter said.

"To this end we have held extensive discussions with the Commerce Commission, including our suggestion that we make a settlement payment (possibly in the form of further charitable donations) to acknowledge our errors."

Spark notes that the 2015 equipment fault issue has been resolved for all 5,325 affected customers, with credits or compensation totalling $216,937.

This is also the case for the 2016 'welcome credit' issue, with all 463 affected customers being paid back the credits totalling $46,300.

The 30-day billing issue has been more complicated to solve, in that a number of customers left Spark over the three-year period. As of last week, Spark says there were up to 8,829 former customers, owed a total of $304,070, who despite the company's campaign had not responded.

"As a business, we've been through a massive amount of change over the last few years and this has significantly improved our customer service delivery. These errors were for the most part an unfortunate and unintended consequence of some of the change we've been through and we regret that they occurred," Moutter said.

Spark said it would review the Commerce Commission's proceedings and has yet to determine the position it will take in response.