Telstra Fined For Misleading iPhone Advertisement
Tuesday 6 January 2015 @ 10.23 a.m. | Legal Research | Trade & Commerce
Telstra Corporation Limited (Telstra) has paid a penalty of $102,000 following the issue of an infringement notice by the Australian Competition and Consumer Commission (ACCC) in relation to an iPhone 6 advertisement during September 2014.
Background
Telstra’s A3 advertisement appeared in The Age newspaper on 27 September 2014 and featured a large photo of the Apple iPhone 6. The advertisement for Telstra’s iPhone 6 and phone plan bundle prominently displayed the plan cost of $70 per month when, in fact, consumers were also required to pay an additional $11 per month for the iPhone 6. The advertisement only disclosed the additional payment of $11 and the total monthly cost of $81 in fine print.
The Complaint
The ACCC considered that Telstra’s advertisement misrepresented the price of the phone and phone plan bundle to consumers.
The infringement notice was issued because the ACCC had reasonable grounds to believe that Telstra had made a false or misleading representation about the price of goods or services, in contravention of s 29(1)(i) of the Australian Consumer Law (ACL).
The ACCC Chairman Rod Sims said:
“Consumers should be able to understand the true cost of an advertised product so they can make informed purchasing decisions.
Businesses must be careful about using attention grabbing headline prices to ensure that their advertisements do not mislead consumers about the actual price they will have to pay. This is especially the case for bundled goods and services like phones and plans.
Advertising that is clear allows consumers to make informed purchasing decisions and improves competition as it gives other businesses the opportunity to compete fairly.”
Response from Telstra
Telstra said in a statement that it was "surprised" to receive the infringement notice, as it said it ads:
"... prominently stated the mobile plan cost, the handset cost and the total minimum cost as legally required".
It added that its advertisement was:
"... in line with the way many others in the industry advertise mobile plans with handsets".
It also argued that the advertisement in question was displayed in a full newspaper page "so all the text was much larger".
Despite this, it said it had made some changes to its advertising to make it "even clearer" to customers what they will pay each month for a plan and handset.
Previous High Court Decisions
Telecommunications companies are often in the sight of the ACCC, for example, in 2013, the High Court upheld a decision ordering TPG to pay a $2m penalty to the ACCC in relation to misleading advertisements. The advertisements gave the impression that consumers could acquire TPG’s Unlimited ADSL2+ broadband internet service for $29.99 per month when in fact it could only be acquired with a bundled home telephone line for an additional $30 per month plus start-up costs.
The payment of a penalty specified in an infringement notice is not an admission of a contravention of the ACL. The ACCC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.
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Sources:
Telstra fined $100,000 over 'misleading' iPhone 6 advertisement – Article from SMH
Telstra pays $102,000 penalty following ACCC infringement notice for iPhone 6 advertisement - ACCC Release MR 309/14
