Watchdog warns Slingshot over 'misleading' discount internet offer

Vocus boss Mark Callander. Photo / Leon Menzies

Internet provider Slingshot has been warned by a consumer watchdog over a "misleading" ad campaign that promised a 10% discount for bundling broadband and electricity services.

The Commerce Commission says the promotion was likely a breach of the Fair Trading Act - which allows for a penalty of up to $600,000 per offence.

The campaign ran between July 2017 and May 2018 and in the Commission's view, was likely to mislead consumers by failing to make it clear that customers would only receive a 10% discount for bundled broadband and electricity services from Slingshot if they also paid their invoices by the due date.

Slingshot's parent company, Vocus, bought a small power retailer, Switch Utilities, in late 2016, and the following year started to offer electricity and broadband as a combined package for customers of Slingshot and its sister ISP Orcon.

It was looking to counter the success of Trustpower, which entered the broadband market with bundled deals, plus Spark, which in some areas has partnered with Genesis Energy.

Analysts say those who have more than one service bundled with a provider are less likely to switch.

ComCom Competition and Consumer General Manager Antonia Horrocks says promotional offers and advertising of discounts that can confuse, and at times, mislead consumers are concerning for the Commission.

The ComCom has made retail telecommunications one of its five points of focus for 2019, following the industry being the most complained about - for the third year in a row - during 2018.

"It is vital that businesses clearly and accurately represent the key terms of offers made when marketing their products. Misleading representations about prices and discounts not only obstruct consumers from properly assessing the total cost of the service but can also unfairly attract them away from businesses who advertise their prices clearly."

"In this case, Slingshot provided information that disclosed the true conditions of the promotion but only once a consumer had nearly completed the online sign-up process. In the Commission's view, Slingshot's late disclosure of a key condition did not remedy the initial misleading representation that was made to consumers at large."

Slingshot responded to the Commission's enquiries by amending its website to clearly reflect that bundling and prompt payment were required to receive the 10% discount.

Parent company Vocus has been asked for comment.