NZ Commerce Commission warns Vodafone for misleading customers

It considered the telco had 'likely' breached the Fair Trading Act.

New Zealand's Commerce Commission has issued Vodafone New Zealand with a warning for misleading customers about account credits and a loyalty discount promotion.

According to a warning letter [PDF] that was issued to Vodafone New Zealand on 17 December 2019 by the commission following an investigation, Vodafone had "likely" breached the Fair Trading Act 1986.

The investigation identified how Vodafone failed to apply two types of credits to individual accounts despite customers being informed either verbally or by email that credits would be applied.

Specifically, one of the concerns was around Vodafone sending targeted email offers to customers who were at the end, or near the end of, their broadband contracts that outlined customers would be offered a NZ$10 per month loyalty discount if they re-signed for a further 12-month term.

The commission said this offer created an impression that customers who re-signed would receive a discount off the price they were currently paying. However, the discount was taken off Vodafone's standard pricing plans.

At the same time, the investigation uncovered terms and conditions in the offer that were not disclosed upfront to customers, including that any of the customers' previous discounts would be removed.

As a result, Vodafone issued invoices that did not include the agreed credit and, in some cases, customers paid more per month when re-signing with them than if they had stayed under their previous agreement with Vodafone.

"Misleading representations about discount offers not only prevent consumers from properly assessing the total cost of the service they are signing up to, but they can also unfairly attract customers away from businesses who advertise their prices clearly and accurately," Commerce Commission chair Anna Rawlings warned.

In the commission's view, as noted in the letter, the representations of the payable price were "likely to be false" because they were higher than what customers had agreed with Vodafone to pay each month.

"All businesses that offer discounts and promotions need to be paying close attention to their systems and processes to ensure customers are charged the correct amount or receive the agreed benefit," Rawlings said.

"This investigation also highlights the importance of consumers checking receipts or invoices to ensure that they are being charged what they expect to be charged and that they receive the discounts and benefits that they expect." 

The letter noted how Vodafone has responded to the commission's enquiries and has since changed its systems to reduce the likelihood of consumer account credits not being applied as represented in the future.

The company has also amended promotional materials relating to its loyalty discount offer to make it clear that discounts were off Vodafone's standard plan prices, and not off the price consumers were already paying for their plans, the commission said.

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