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ACMA finds telcos contravened TCP Code with security deposits

The telco industry regulator has found that two service providers breached the TCP Code by requiring a security deposit without first undertaking a credit assessment.
Written by Corinne Reichert, Contributor

The Australian Communications and Media Authority has found telecommunications providers Vaya and Live Connected to be non-compliant with the Telecommunications Consumer Protections (TCP) Code, as they charged customers a AU$20 security deposit before providing services.

The February 2015 policy of both Vaya and Live Connected required customers to provide the security deposit, to be debited with their next monthly bill, in order to ensure customers paid for the service they were using.

This contravened the TCP Code, however, which states that service providers are only permitted to request a security deposit following an individual credit assessment in relation to the specific product being purchased by the consumer. Neither Vaya nor Live Connected carried out these credit assessments.

"This finding sends an important message to the telco industry that security deposits cannot be unilaterally imposed on all customers," said ACMA chairman Chris Chapman.

Vaya and Live Connected have acceded to the ACMA's finding, agreeing that they will no longer take security deposits without first undertaking a credit assessment.

The ACMA in October also directed six telcos -- AussieSim, Btel Communications, Datawave Internet, Golden IT, Harbour of Technology (Hotnet), and MVoice -- to comply with the TCP Code after failing to lodge a statement of code compliance for the last two years.

"The ACMA will continue to ensure industry participants work within industry 'accountability measures', so the ACMA will take action (such as issuing directions) if necessary," said Chapman.

The ACMA added that this year, 391 telcos did lodge the documents on time; in 2014, 331 lodged documentation, and in 2013, only 225 telcos lodged.

"While the ACMA won't be tolerating repeat instances of non-compliance, I'm obviously very pleased to see a general trend of greater compliance over the past few years and reduced complaints to the Telecommunications Industry Ombudsman," Chapman said.

In September, the ACMA had formally warned more than 20 telcos over failing to lodge a statement of code compliance.

The formal warnings [PDF], issued under subsection 122(2) of the Telecommunications Act 1997, were sent out to 25 telcos, including Amnet, Tele-Talk, Novatel, Infiniti, Blue Telecom, Wire Networks, Supercheap Telco, Telco4u, ReddeNet, and Call Central Communications.

"While this number of warnings may seem high, it actually reflects a trend of increasing compliance within the telecommunications industry, with the number of CommCom warnings down from 39 in 2014 and 95 in 2013," Chapman said.

The ACMA issues formal warnings to those companies that are first-time offenders, with the regulator presently debating further action to be taken against those already under investigation for other breaches.

Since coming into effect, 178 formal warnings, 35 directions to comply, and one infringement notice have been sent out by the ACMA under the TCP Code.

The ACMA updated its TCP Code earlier this month, saying it will provide more flexibility and simplicity for telcos.

The new code [PDF] simplifies how telcos are to provide information, removes duplication under Australian Consumer Law and the Privacy Act, and cuts down on repetition of obligations throughout the code.

"The updated TCP Code reinforces the ACMA's commitment to working with key stakeholders to ensure regulation remains relevant and effective, while giving industry more flexibility in how it provides the necessary information to consumers (its customers)," said Chapman.

The TCP Code, which first came into effect in July 2012, serves the primary purposes of requiring telcos to provide consumers with clear information about what their mobile phone plans offer, including a two-page summary of every plan; notify customers about how much voice and data they have used under their plan; and suggest spend-management tools to prevent future overuse.

Customer complaints handling was also made more effective and timely under the code.

However, telco industry bodies have claimed the code will make information on services less clear for consumers, with the Australian Communications Consumer Action Network (ACCAN) saying information on services and plans would be less clear for consumers.

ACCAN CEO Teresa Corbin warned the industry that she would be "keeping a close eye" on the impact of the updated code.

"In a backward step, changes introduced today mean telcos will no longer be obliged to publish important information on their websites, such as coverage maps, international roaming information, and contact details for financial hardship staff," Corbin said.

"It's now up to the telco how they provide this information, and we are concerned that this will particularly harm consumers who face accessibility barriers, and are reliant on web-based information. It may affect consumers' ability to make informed purchasing decisions."

ACCAN claimed that it was successful in lobbying the ACMA to ensure telcos cannot use terms like "unlimited", "free", and "cap" in advertising under the new code, however.

According to ACCAN, industry consultation is still ongoing for Chapter 9 of the TCP Code, which regards compliance and monitoring obligations.

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