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ACCC warns telcos against 'unlimited' ads

The ACCC has revealed that it investigated Telstra, Vodafone, and Optus earlier this year for their use of the word 'unlimited' in mobile advertising, and has threatened legal action backed by AU$10 million penalties.

The Australian Competition and Consumer Commission (ACCC) has put out a warning to Telstra, Optus, and Vodafone to stop using the word "unlimited" in their advertising, or risk facing legal action.

All three of Australia's mobile providers had used the word in their advertising, with ACCC Chair Rod Sims saying the consumer watchdog had begun investigating the ads at the same time that Optus brought court action against Telstra.

Sims pointed to Telstra's "unlimited" plans, which provided 40GB of data at usual speeds, after which it was capped at speeds of 1.5Mbps; Optus' "unlimited" offering, which similarly imposed a 1.5Mbps speed cap as well as restrictions against tethering, streaming, and downloads, and a de-prioritisation during congestion; and Vodafone's "unlimited" plan, which capped usage at 1.5Mbps.

These ads, aired between March and June this year, were "qualified with disclaimers that were not sufficiently prominent or clear to explain to consumers the existence and impacts of the limitations", according to the ACCC.

Telstra, Optus, and Vodafone have stopped using the word in their advertising since the Australian Federal Court found Telstra's ads to be misleading or deceptive conduct.

"Telecommunications companies should be wary of using absolute claims like 'unlimited' where that does not give a true picture to consumers of what is being offered," Sims said.

"With much higher penalties now available for breaches of consumer law, I hope they will take their obligations more seriously. From now on, consumer law penalties will seriously affect their bottom line, and we will not hesitate to seek the highest possible penalties."

The ACCC had earlier this month flagged a ninefold increase to the penalties the consumer watchdog will be able to wring out from tech and telco companies, with legislation increasing fines from AU$1.1 million to AU$10 million.

Penalties against individuals under Australian Consumer Law -- with the ACCC on Monday saying it "may bring proceedings against executives who knowingly approve misleading advertisements" -- have also been upped, from AU$220,000 to AU$500,000 for each breach.

Optus had last month confirmed the end of its Federal Court battle with Telstra over the latter telco's "unlimited" ads, saying the judgment "comprehensively vindicated" its legal action.

"Optus took the action against Telstra because it felt the advertisement was likely to mislead consumers," a spokesperson said without detailing the settlement.

"Our action has been comprehensively vindicated by the judgment, and the offending advertisements have been removed from the market. Optus welcomes the closure of this successful action."

This followed the court in May granting an injunction preventing Telstra from continuing its "unlimited" mobile advertisements, after finding they constitute misleading and deceptive conduct.

According to Justice Gleeson, Telstra's advertisements "falsely convey the representation" that the telco offers a mobile product with no limits on data speeds, data volumes, and the ability to download data without interruption or delay, misleading the public on the nature and characteristics of mobile products including the geographical reach of its network.

This is in contravention of both Australian Consumer Law and the Competition and Consumer Act, Gleeson J said at the time.

During the initial hearing, Telstra's billboard and online ads that state, "One word from Australia's best mobile network: Unlimited" had come under fire.

Optus counsel Richard Lancaster SC had argued that Telstra's usage of the word "unlimited" is misleading, because ordinary consumers would be likely to think unlimited applies to characteristics across data speed, data volume, geographical reach, and availability across devices.

"Unlimited is a powerful word," Lancaster said.

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