ACCC orders Exetel to pay customers back for misleading contract terms

The ACCC found that a clause in Exetel's 12-month fixed-term residential broadband contracts was unfair, and has ordered Exetel to provide compensation to affected customers.

Following an Australian Competition and Consumer Commission (ACCC) investigation, telecommunications company Exetel has agreed to compensate customers that were affected by changes it made to its fixed-term residential broadband plans.

According to the ACCC, Exetel made changes to more than 2,000 residential broadband customers' 12-month fixed-term contracts mid last year, and informed them that they were required to either change their broadband plans or terminate their service without penalty. Exetel went about making the contract changes under a clause that was outlined in its standard residential broadband agreement, which stated the company could vary any part of that agreement for any reason.

However, the ACCC said it considered the clause an unfair contract term under the Australian Consumer Law, and considered Exetel's advertisements of these fixed-term plans at the time were misleading because it meant that customers would receive the service for the 12-month fixed term, when it was not necessarily the case.

As a result, Exetel has agreed to refund any additional monthly subscriptions costs to customers who changed to a new plan and incurred for the remainder of their fixed-term; refund any activation costs charged to customers who terminated their Exetel service rather than change to a new plan; and remove the clause from its residential broadband standard form of agreement

ACCC acting chair Dr Michael Schaper said under the Australian Consumer Law, unfair contract terms in standard form consumer contracts are void.

"The ACCC considers that contract terms which allow a supplier to unilaterally vary the agreement for any reason are likely to be unfair," he said.

Schaper said to prevent a repeat scenario, the ACCC will contact other telecommunications providers with similar outdated terms in their consumer agreements to review and update their standard agreements.

"Telecommunications companies should also be mindful that from November 2016, the law will also protect small businesses from unfair terms in standard form contracts," he said.

In September last year, Exetel signed an exclusive two-year National Broadband Network aggregation agreement with Optus. Under the deal, Exetel has access to all of Optus' NBN points of interconnect and technologies, via its residential broadband over NBN product.

At the time, Exetel CEO Richard Purdy said the deal marks the company's commitment to reaching its NBN growth targets.

"We look forward to working with Optus as they help us keep our NBN pricing amongst the most competitive in the market," he said.

The deal was in addition to a three-year 4G wholesale mobile agreement Optus signed with Exetel last May.

On Monday, the ACCC issued Kogan a AU$32,000 fine for intentionally increasing its prices before offering customers a discount as part of a Father's Day promotion last year.

The ACCC said it had reasonable grounds to believe the online retailer increased the prices of these products before or during the promotion, essentially resulting in a 9 percent discount rather than the 20 percent discount that was advertised.