ACCC Takes Telco to Court over Alleged Unconscionable Conduct
Tuesday 12 April 2016 @ 10.23 a.m. | Legal Research | Trade & Commerce
In a recent ACCC Media Release, it was reported that the Australian consumer watchdog, the Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court against 11 corporations trading as SoleNet and Sure Telecom (the Harrison Companies) and their director James Harrison, alleging unconscionable conduct in the supply of telecommunications services and undue harassment, in breach of the Australian Consumer Law (ACL) [the ACL is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)].
Background to the Action
It has been reported that since 2011 various Harrison Companies have been a substantial source of consumer complaints and a serious and ongoing regulatory problem for the Telecommunications Industry Ombudsman (TIO) and Australian Communications and Media Authority (ACMA).
During 2014, ACMA found that one Harrison Company had breached 19 separate clauses of the Telecommunications Consumer Protections Code (TCP Code) including making unauthorised customer transfers.
During 2015, ACMA conducted two more investigations into Harrison Companies and found further breaches of the TCP Code relating to the unauthorised transfer of customers between Harrison Companies. These findings resulted in the ACMA formally directing the Harrison Company to comply with the TCP Code.
On 10 March 2016, the ACCC filed an interlocutory application seeking a freezing order against James Harrison and the Harrison Companies from removing from Australia, or from disposing of, or otherwise dealing with, or diminishing the value of, any of their assets in Australia. Justice Moshinsky made freezing orders against James Harrison and the Harrison Companies on 11 March 2016 and on 16 March 2016. His Honour extended the freezing order to cover assets controlled by Mrs Kelly Harrison.
The ACCC Allegations
The ACCC alleges the Harrison Companies, controlled by Mr Harrison, have engaged in unconscionable conduct in all the circumstances by:
- ceasing trading and winding up companies which incurred regulatory sanctions and unpaid debts to regulators;
- purporting to transfer customer contracts from Harrison Companies which ceased trading to new Harrison Companies without the customers’ knowledge or informed consent;
- seeking payment of early termination fees and cancellation fees from transferred customers where the Harrison Company seeking the payment has no contractual right to payment;
- referring these alleged debts to a debt collection agency and law firm, each of which sent letters demanding the payment of early termination and cancellation fees pursuant to purported contracts between the “new” companies and the transferred customers, when the customers had not in fact entered into contracts with the relevant “new” companies; and
- engaging in undue harassment of transferred customers in relation to the payment of these alleged debts.
The ACCC also alleges Mr Harrison was involved or knowingly concerned in the contraventions.
ACCC Chairman Rod Sims was quoted as saying:
“The ACCC's case is that customers were not informed about, and did not consent to, their telecommunications contracts being transferred to other Harrison Companies, which the ACCC alleges was largely to avoid regulatory difficulties and debts. It is alleged that this conduct was then compounded by the Harrison Companies seeking to enforce early cancellation and termination fees which were not part of any contract between the consumer and that company, and harassing consumers for payment of these alleged debts. Unconscionable conduct and conduct involving ‘essential services’, such as telecommunications services are current enforcement priorities for the ACCC.”
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
ACCC takes SoleNet telco battle to the federal court
ACCC takes action against SoleNet, Sure Telecom and James Harrison for alleged unconscionable
conduct and undue harassment - ACCC Release MR 40/16
