Optus Internet Pty Limited Penalised For Alleged False or Misleading Conduct
Friday 18 December 2015 @ 8.56 a.m. | Trade & Commerce
Optus Internet Pty Limited has paid penalties totalling $51,000 following the issue of five infringement notices by the Australian Competition and Consumer Commission (ACCC). The ACCC has also accepted an enforceable undertaking from Optus.
The ACCC issued the infringement notices because it had reasonable grounds to believe that Optus had made false or misleading representations in relation to the data transfer rates (or “speeds”) offered on its existing cable broadband plans.
Background
Between January 2015 and August 2015, Optus used the term “NBN-like speeds” in advertising both its cable broadband service and particular cable broadband plans. The representations were made on websites, billboards and shopping centre posters, as well as in catalogues and flyers.
The ACCC was concerned that that Optus’ use of the term “NBN-like speeds” represented that the advertised cable broadband plans provided speeds comparable to the speeds available on the National Broadband Network (NBN) plans, when that was not the case for the plans Optus advertised.
The Misleading Advertising
The cable broadband plans advertised by Optus only offered download/upload speeds of 30/2 megabits per second (Mbps) for the advertised price. A wider range of broadband plans are available on the NBN, including plans that offer faster download/upload speeds of 50/20 and 100/40 Mbps.
For an additional price not disclosed in the relevant advertisements, consumers could acquire from Optus a faster cable broadband plan that offered download/upload speeds of 100/2 Mbps. However, the upload speeds available on this plan are not equivalent to the faster upload speeds available on NBN plans.
Reaction from the ACCC
Commenting on the penalties hand down in a recent ACCC Media Release, the ACCC Chairman Rod Sims said:
“As consumers migrate to the NBN, the ACCC’s action in this matter is a timely reminder to broadband internet providers that they must not misrepresent the performance of the services they are selling. While businesses may use comparative advertising to promote the superiority of their products over those of competitors, this advertising must be accurate and businesses should be able to substantiate these claims. The ACCC reminds broadband internet providers that they must ensure their advertising and product offers to consumers clearly and accurately represent the download and upload speeds they can expect to achieve. The ACCC will continue to closely monitor the market for false or misleading claims about internet performance and will not hesitate to take appropriate enforcement action if necessary.”
Conditions of the Enforceable Undertaking
As part of the court enforceable undertaking provided to the ACCC, Optus has acknowledged that its conduct may have contravened ss 18, 29(1)(g), 29(1)(i) and 34 of the Australian Consumer Law (ACL) [ACL is contained in Sch 2 of the Competition and Consumer Act 2010 (Cth)], and agreed:
- for a period of five years not use NBN-like speeds representations in the promotion of its cable broadband internet service, in circumstances where it does not offer upload and download speeds which are comparable to the upload and download speeds available on the NBN;
- write to its customers who acquired its cable broadband internet service between 1 January 2015 and 23 August 2015 (the Customers) advising them of the manner in which Optus Internet’s use of the term “NBN-like speeds” was misleading;
- allow the Customers to cancel their cable broadband internet service at no cost and refund to them any start-up fee they paid to acquire the service; and
- arrange for an independent third party to review its trade practices compliance program and implement any changes recommended by that party.
Comment from Optus
An Optus spokesperson said it has taken steps to rectify the situation:
“Optus has taken the following steps to rectify the issues that were identified including: writing to customers who purchased the product between January 1 and August 23 2015; and provided an undertaking not to use the unqualified phrase ‘NBN-like speeds’ in promotions for Optus HFC cable service."
The ACCC can issue infringement notices where it has reasonable grounds to believe a person has contravened certain consumer protection provisions of the ACL. The payment of an infringement notice is not an admission of a contravention of the ACL however in this case Optus has admitted in its undertaking to the ACCC that it may have contravened the ACL.
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Sources:
Optus pays $51,000 in penalties for alleged false or misleading representations about cable broadband internet speeds – ACCC Release MR 263/15
