iiNet Fined For Misleading Advertising under Consumer Law
Friday 13 March 2015 @ 9.51 a.m. | Legal Research | Trade & Commerce
iiNet Limited (iiNet) has paid penalties of $204,000 following the issue of two infringement notices by the Australian Competition and Consumer Commission (ACCC) in relation to recent advertisements for iiNet’s Naked Broadband 250GB Plan.
Background
The infringement notices were issued because the ACCC had reasonable grounds to believe that iiNet’s advertisements contravened the Australian Consumer Law (ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth)) by failing to prominently state the total minimum price of the service.
iiNet’s advertisements appeared on a tram and billboard in metropolitan Melbourne in November 2014. The advertisements displayed a monthly price of $69.95 for iiNet’s Naked Broadband 250GB Plan. The total minimum price was included in the advertisement but the ACCC considered that it was not displayed in a prominent way, as required by the ACL.
Reaction from the ACCC
The ACCC Chairman, Rod Sims said:
“Consumers must be able to understand the true cost of an advertised product so that they can make informed purchasing decisions.
Businesses must ensure that when they advertise part of the price of a good or service, the total minimum price is also prominently displayed.
Prominence means that the total minimum price can be easily seen and strikes the attention of the consumer. In assessing whether the total minimum price is prominent, it is important to consider the context in which the advertisement appears - for example if the advertisement is on a moving vehicle, where consumers may only be able to see the advertisement momentarily.”
Consumer protection in the telecommunications sector remains an ACCC enforcement priority.
Other Court Actions by the ACCC
In 2014, Telstra paid a $102,000 penalty for an infringement notice in relation to an iPhone 6 advertisement which the ACCC considered made a false or misleading representation as to the total price payable by consumers.
In 2013, the High Court upheld a decision ordering TPG to pay a $2 million 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.
As iiNet is a publicly listed company, the amount of each infringement notice penalty is $102,000.
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Sources:
iiNet Limited pays $204,000 in penalties following ACCC infringement notices for Naked Broadband Plan advertisements – ACCC Release MR 22/15
