TPG faces court action for allegedly misleading customers

The ACCC has alleged that TPG misled customers over a AU$20 prepayment term in its contracts, estimating that TPG likely retained millions of dollars in forfeited prepayments.
Written by Corinne Reichert, Contributor

TPG is in the consumer watchdog's crosshairs again, with the Australian Competition and Consumer Commission (ACCC) kicking off legal proceedings in the Federal Court over alleged misleading conduct that is in breach of Australian Consumer Law.

The ACCC has specifically taken aim at TPG's claims over a AU$20 prepayment dating back to March 2013, under what the watchdog has called unfair contract terms, and is seeking penalties and compensation for consumers.

"Customers signing up to a TPG plan had to pay AU$20 for what TPG describe as a 'prepayment' to cover costs that might be incurred but are not included in their plan, such as overseas phone calls," the ACCC said on Tuesday.

"The prepayment operates as a non-refundable fee, and TPG retains at least AU$10 of the prepayment when a customer cancels their plan."

ACCC Deputy Chair Delia Rickard said a reasonable consumer would expect the AU$20 prepayment to be refunded where it is not used, adding that it was "unacceptable that TPG only disclose this forfeiture in fine print".

Under the terms of its contracts, TPG has been automatically topping up customers' prepaid balances when they drop below AU$10, bringing them back up to AU$20, the ACCC said.

"Since March 2013, the ACCC estimates that TPG is likely to have retained millions of dollars paid by consumers in prepayments that were forfeited," Rickard said.

An example provided by the ACCC was where a customer never uses any telco services that are not included in their plan, meaning they forfeit AU$20 on cancelling the plan; or where a customer uses AU$12 of the prepayment, bringing the balance below AU$10 and triggering the automatic top-up back to AU$20, then never using any telco services not included in their plan and forfeiting the AU$20 when cancelling.

"A customer makes a call to a 1300 number which costs AU$8 and calls to 1300 numbers are not included in their plan. TPG deducts AU$8 from the AU$20 prepayment. The prepayment balance then sits at AU$12," the ACCC said in a third example.

"The customer then cancels their plan. The customer forfeits AU$12 when they cancel their plan."

The court action follows the ACCC announcing a year ago that TPG would be refunding National Broadband Network (NBN) customers after not providing them with the speeds they were paying for.

TPG had misled customers about the maximum speeds their lines were capable of between September 1, 2015, and June 30, 2017, the consumer watchdog said at the time.

ACCC Chair Rod Sims said fibre-to-the-node (FttN) and fibre-to-the-basement (FttN) technical limitations meant "many" of its 100/40Mbps customers could not reach those speeds, or even half those speeds.

In addition to TPG, the ACCC also forced Telstra, Optus, iiNet, Internode, Dodo, iPrimus, and Commander to compensate tens of thousands of customers for not providing them with the NBN speeds they were paying for.

Last month, however, TPG took out the ACCC's third NBN speed-monitoring report, having delivered 88.7 percent of its maximum plan speeds overall and 88.4 percent during busy hours for downloads.

TPG likewise scored highest on average upload speeds, providing 89.2 percent of its maximum plan speeds overall and 89.1 percent during busy hours.

The ACCC last month also commenced legal proceedings against Optus for making false or misleading representations over its direct carrier billing practices, seeking AU$10 million in penalties.

This followed Telstra issuing refunds to 72,000 customers of AU$9.3 million in total after misleading customers on its premium direct billing service, per an order made in April by the Federal Court to pay AU$10 million in penalties for making false or misleading representations to consumers.

In September, the ACCC similarly sent out a warning to Telstra, Optus, and Vodafone to stop using the word "unlimited" in their advertising, or risk facing legal action.

The watchdog earlier in September also flagged a ninefold increase to the penalties that 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 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.

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