The Australian Competition and Consumer Commission (ACCC) is taking Truphone's Brisbane-based subsidiary Startel to court over allegations about the company's telemarketing practices to sign up new customers to mobile services.
The watchdog has alleged that the company breached the unsolicited agreement provisions of Australian Consumer Law. It said that in telemarketing calls, Startel failed to inform consumers of their cooling-off rights, did not provide a contract within five business days, did not provide a contract in the correct format, and had contracts with terms that were inconsistent with consumer rights law.
The company also began charging for services inside the 10-day cooling off period.
The matter will first be heard in the federal court in Brisbane on August 13, 2013.
The ACCC said today that it will be seeking a declaration from Startel, as well as injunctions, a community service order, pecuniary penalties, and costs.
The competition regulator will also be looking to make Startel implement a compliance program to make sure it is in line with Australian Consumer Law.
Posts about Startel on telecommunications forum Whirlpool indicate a pattern of aggressive telemarketers and expensive break fees for customers who leave before their contract has completed.
"They have called me at all times of day and night, workdays and weekends. Sometimes, I can't even understand who they say they are, but the last one I received, they identified themself [sic] as being from Mobile Dealers on behalf of Startel," one user said in 2010.
"I think my mum is being conned on Startel. They promised her a really bad deal with a free phone, and she fell for it. Then she rang up to say she doesn't want to sign the contract, they said they will call her back, and they never did. I told to call them before the cooling-down period, and each time they said they have to call her back and they never do return her calls," another user said in April this year.
Startel resells mobile services on Optus' mobile network.
Truphone's managing director in Australia Alex Blinko said that Startel would look to continue to work with the ACCC to address the issues concerning Startel customers.
"Startel always endeavours to do right by our customers, over and above our legal regulatory obligations," he said in a statement.
"Throughout the ACCC’s investigation period, Startel has cooperated on a transparent basis, and has used the ACCC’s observations and requirements to amend its processes, policies and performance. We look forward to continuing to work with the ACCC to bring this matter to a close."
It is not the first time that Startel has caught the attention of the government. In 2009, prior to the buyout of the company by Truphone, the Australian Communications and Media Authority (ACMA) received an enforceable undertaking (PDF) from Startel in relation to calling customers who were listed on the Do Not Call Register.
Update: Added comment from Startel.