Last week, Optus Internet Pty Limited paid $51,000 in penalties in connection with its advertising for cable broadband. In Australia, consumers receive a broad range of protections by the Australian Consumer Law (ACL). The Australian Competition and Consumer Commissioner (ACCC) is the national regulatory body responsible for enforcing the ACL.

The internet over the years has become an increasingly important part of consumers’ lives, and there has been growing competition between providers for the supply of Internet services and plans. Alongside these developments, the ACCC has kept watch on the advertising and selling practices of internet providers, to make sure they don’t infringe consumer protections. The recent penalties against Optus are the latest in a line of stings by the ACCC in this industry.

Misrepresentations About Data Speeds

One of the key provisions of the ACL is the broad prohibition against misleading conduct. For more background, see our other article outlining what you need to know about misleading conduct. Alongside the general prohibition against misleading conduct, section 29 of the ACL prohibits a range of false or misleading representations about goods or services, including representations about the quality or standard of goods or services.

Between January and August 2015, Optus used the expression “NBN-like speeds” in its advertising materials to describe the data transfer rates of its broadband service and specific broadband plans. In the ACCC’s view, this term misrepresented that Optus’ speeds were comparable to speeds available on the NBN. In fact, Optus’ speeds were not as fast.

ACCC Enforcement

The ACCC has a wide range of tools at its disposal to promote compliance with the ACL. In this case, the ACCC used two enforcement mechanisms – it issued infringement notices and accepted court enforceable undertakings.

Infringement Notices

The Australian Consumer Law is contained in Schedule 2 of the Competition and Consumer Act 2010 (CCA). Under section 134A of the CCA, the ACCC may issue an infringement notice if it believes, on reasonable grounds, that a person has contravened certain provisions of the Australian Consumer Law (including section 29).

Importantly, by paying an infringement notice, a business is not taken to have admitted that it contravened the ACL. However, in its undertakings, Optus accepted that its “NBN-like speeds” advertising may have contravened the law.

Undertakings

Under section 218 of the ACL, the ACCC may accept undertakings in relation to the conduct of a business and the court may make certain orders if the business breaches the undertakings.

In the undertakings given by Optus to the ACCC, Optus committed to the following obligations:

  • Not to use the expression “NBN-like speeds” in its advertising materials unless the speeds it is advertising are equivalent to speeds available on the NBN;
  • To allow customers who signed up during the period of the advertising to cancel their contract without cost and seek a refund for any upfront fees; and
  • To arrange for an independent review of its trade practices compliance program and implement any recommendations.

In its press release, the ACCC reminded businesses that all comparative advertising must be accurate and businesses should be able to substantiate claims they make about the quality of their products compared to those of competitors. The ACCC also noted that it would continue to monitor claims about internet performance and take action against businesses where necessary.

Questions? Get in touch with LegalVision’s consumer lawyers on 1300 544 755.

Thomas Kaldor

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.