Home & Office

NZ ISP Trustpower fined NZ$390,000 for misleading broadband pricing

The wholesale internet provider has been fined almost NZ$400,000 for a misleading advertising campaign on a low-cost bundled service with hidden costs.
Written by Corinne Reichert, Contributor on

New Zealand wholesale internet, gas, and electricity provider Trustpower has been fined NZ$390,000 by the Auckland District Court over misleading conduct in relation to the price and terms of its unlimited data broadband and electricity bundle.

The misleading conduct occurred between March and July 2015, when Trustpower advertised via TV, online, and billboard that it would charge NZ$49 a month for 12 months for the bundle, but neglected to mention that this was under a 24-month contract wherein the second 12 months would cost NZ$79 per month.

There was also a cancellation fee of NZ$195 charged if customers attempted to end their contract early.

As a result, The New Zealand Commerce Commission (ComCom) filed seven charges under the Fair Trading Act in August, saying Trustpower had signed 8,000 new customers to the bundle.

Trustpower, which last month spoke out against the proposed merger of Vodafone NZ and Sky TV, pleaded guilty.

"It's vital businesses clearly disclose the price and any key conditions when marketing their products so consumers can properly assess the total cost of the service," Competition General Manager Antonia Horrocks said.

"An artificially low headline price that is subject to significant limits in the small print, including substantial term and exit fee requirements, is likely to be misleading and in breach of the Fair Trading Act.

"This type of advertising is of particular concern to the commission as the misleading headline price can attract customers away from traders who advertise their prices clearly and fairly."

Trustpower was also fined NZ$17,000 in 2009 for breach of the Fair Trading Act in relation to misleading conduct on its power bill review service.

Earlier this month, telco Vodafone NZ was similarly fined NZ$165,000 for providing misleading information to its customers on its "Red Essentials" mobile phone plan, and overcharging them by a combined NZ$92,000.

Vodafone's fine, also handed down by the Auckland District Court, came as a result of the ComCom filing charges in May for Vodafone's breach of the Fair Trading Act.

Specifically, Vodafone NZ had reduced its Red Essentials plan from NZ$79 per month down to NZ$69 in January 2014, but its billing system continued charging customers who signed up for the duration of 2014 NZ$79.

As a result, misleading invoices were sent to around 15,000 customers, overcharging most of them by slightly under NZ$1 per week.

Vodafone has since refunded these amounts to all affected customers.

"It is vital that businesses invest in making sure they have strong compliance processes that can support these types of promotional offers, particularly when selling products to a significant customer base," Commissioner Anna Rawlings said at the time.

"Consumers rely on companies to invoice and debit them accurately, as many do not check the finer details. Overcharging a large number of customers a small amount can result in firms receiving large sums of money they are not entitled to, so they need to be vigilant to avoid misleading consumers and breaching the Act."

Vodafone was also fined more than NZ$400,000 under the Fair Trading Act in August 2011 for misleading representations on its Vodafone Live product; fined NZ$82,000 in November 2011 for misleading its mobile customers over NZ$1-a-day data charges; fined NZ$960,000 in September 2012 for its Broadband Everywhere, Supa Prepay Connection Pack, and Largest 3G Network advertising campaigns; and paid out a settlement more than NZ$260,000 in January 2014 to customers for its Broadband Lite service promotion.

Editorial standards