Vodafone Australia admits to misleading customers

ACCC completes treble of hits on big three telcos as Vodafone admits to likely breach of ASIC Act.

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(Image: Asha McLean/ZDNet)

Vodafone is the latest Australian telco to admit to misleading customers over direct billing services and is set to offer refunds to impacted customers, after an investigation by the Australian Competition and Consumer Commission (ACCC).

The ACCC said Vodafone admitted it "likely breached the ASIC Act from at least 2015" when it charged consumers for content they did not knowingly purchase or agree to buy. The telco has signed a court enforceable undertaking, the consumer watchdog said.

Vodafone was paid commissions for sales of the ringtones, games, and digital content by third-parties, with the direct billing service enabled by default consumer accounts.

"Purchases could occur with as little as one or two clicks," the ACCC said.

"The purchases would then be charged on the customers' next Vodafone bill."

ACCC chair Rod Sims said thousands of customers were hit by the deceptive practices.

"Other companies should note, money made by misleading consumers will need to be repaid," he said.

Vodafone began phasing out the service in mid-2015 following customer complaints over 2014 and 2015, the watchdog said, but consumers could still make purchases without any identity verification until March 2018.

The latest undertaking means the ACCC has scored victories over Australia's big three telcos for deceptive conduct.

At the start of the year, Optus was fined AU$10 million for misleading customers, after it admitted to misleading consumers and breaching the ASIC Act for its third-party billing practices.

Optus further admitted that it had knowledge from as early as April 2014 that customers were being billed for direct carrier billing services that they had unknowingly or mistakenly signed up for.

The Singaporean-owned telco made around AU$65.8 million out of commissions for the content since 2012.

See also: ACCC opposes TPG and Vodafone Australia merger

Early in July, the ACCC said only one quarter of eligible customers had taken up the refund offer.

Last month, the ACCC began legal action against Optus for allegedly misleading consumers about needing to move onto the National Broadband Network.

The consumer watchdog alleges that Optus sent an email on 24 May 2018 advising some of its mobile customers that their broadband service would be "disconnected very soon" and encouraged them to "make the switch, before it's too late".

The email was allegedly sent to 138,988 of Optus' mobile customers.

Optus has since admitted it misled customers, apologised, and offered a free exit for those who accepted the deal.

In September, the ACCC disclosed that Telstra had issued refunds to 72,000 customers of AU$9.3 million in total after misleading customers on its direct billing service.

The Federal Court similarly levelled a AU$10 million fine on Australia's incumbent telco.

According to the ACCC, between 2015 and 2016, Telstra made false or misleading representations to consumers by charging more than 100,000 customers for content subscription services who had neither requested them or the ability to opt out of them.

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