Three years ago the Herald on Sunday uncovered an egregious abuse of telemarketing called in that industry "slamming". A contractor for the telco Slingshot had gained unauthorised access to Telecom's customer database and was using the information to "cold call" Telecom's customers with the advantage of what it knew of their accounts. It has taken nearly three years for Slingshot to be punished.
The company pleaded guilty in the Auckland District Court this week to 50 charges brought by the Commerce Commission under the Fair Trading Act. Slingshot was fined $250,000 for conduct that Judge Russell Collins said, "had a real and disturbing impact on customers."
The company that did the cold calling on Slingshot's behalf, Power Marketing, has been separately charged by the commission in a case to be heard next year. But Slingshot admitted its oversight of Power Marketing had been inadequate. Slingshot was the fastest growing telco in New Zealand from 2009-2011. When the Herald on Sunday investigated in January 2011, Slingshot's growth was explained.
Power Marketing staff had the login to a database containing names, addresses and billing details for about 2.15 million Telecom customers. It told the telemarketers exactly what plan the customer was on, how much had been paid and whether the customer was tied to a contract.
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As one of our informants said, it put the customers at a disadvantage because the caller knew their accounts better than they did - knew them so well the customers could gain the impression they were talking to Telecom staff.
Telemarketing is an intrusive technique at the best of times. Call centres prefer to ring early in the evening just as most people are preparing dinner or eating it. How they can imagine that anyone wants to hear their pitch at that moment is beyond imagining, but someone must listen to them or else they would not do it.
How many of those who respond at that time of night are elderly and confused or alone and all too happy to chat on the phone? Our stories in 2011 brought a large mailbag, many of the letters from adult children of elderly customers who said their parents were signed up for Slingshot accounts they did not understand.
Telcos are not the only industry that ought to take a hard look at their telemarketing. Electricity retailers are as bad. Some of them favour the personal approach, sending agents with clipboards to knock on suburban doors at dusk.
No doubt the reason these sort of industries resort to telemarketing is that their products are invisible. They cannot display in a shop or a newspaper. They are also complicated. Comparing rates and terms of telephone and power services is arduous enough for an accountant - it is not the sort of exercise people ought to be pressed to do at the front door or on the phone while dinner is getting cold.
Electricity and telephone services used to have a single state-owned supplier. Now they come from competing companies and consumers have a choice. But choice is useless if consumers have no source of information they can trust. Advice that comes anonymously in an unsolicited phone call is asking us to take too much on trust. The Slingshot case is a warning that a suspiciously well-informed cold-caller is one you should cut short.