Vodafone faces huge fine over false ads

Photo / Greg Bowker

A Vodafone Live customer spent sleepless nights and another rang the company call centre in tears after being charged hundreds of dollars for a mobile internet service they thought was free.

The Commerce Commission brought five charges under the Fair Trading Act against the corporation in the Auckland District Court and lawyers for both sides made sentencing submissions yesterday.

Vodafone lawyer Bruce Gray QC said the company apologised to customers but did not set out to mislead them.

He acknowledged the company faces a fine likely to be hundreds of thousands of dollars.

Commerce Commission lawyer Nick Flanagan said the case involved large-scale offending by a major corporate over 14 months in 2007 and 2008.

Vodafone's mobile internet service Vodafone Live was advertised with the phrases "completely free", "absolutely free" and "you won't be charged" on the company's website.

However, customers were billed when they left the Vodafone Live sites.

Mr Flanagan said victim impact statements show customers spent sleepless nights worrying about large phone bills. One customer was charged more than $1000 and another was threatened by a debt collecting agency.

"One describes being in tears when calling the Vodafone call centre."

He said the commission had received 31 complaints but that was likely "just the tip of the iceberg".

Mr Gray said the problem was with different operating systems on different phones sold by the company. He said some phones continued to display the Vodafone Live banner when customers went online, even when the customer had left Vodafone Live sites.

"Vodafone fell down [when] it said 'We'll tell you when you incur cost' and some people incurred cost without being told."

Judge Roderick Joyce said he was surprised Vodafone had not tested its system on different phones.

"If Vodafone had thought of that, we wouldn't be here," Mr Gray said.

Internet data over mobile phones was a relatively new phenomenon at the time of the offending and the company had pleaded guilty at the first opportunity, Mr Gray said.

Judge Roderick Joyce has reserved his decision.

HIT IN THE POCKET

* Vodafone Live advertised as 'absolutely free'.

* Company billed customers for use when they left specific sites - but didn't tell them.

* Customers were billed hundreds of dollars for Vodafone Live use.

* One customer called company in tears while another was chased by debt collectors.

* Vodafone faces a fine of hundreds of thousands of dollars under Fair Trading Act.