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Telco telemarketer fined $2.5m for flogging ‘voice’ services to Indigenous communities with no network coverage.
Darwin Federal Court fined telco telemarketer VIPtel Mobile $2.5 million for flogging phantom Optus ‘voice’ services to regional communities across Australia – with no network coverage.
EDirect, trading as VIPtel Mobile, made “misleading and deceptive” representations to customers that it had verified there was coverage at the customers’ address when it had, in fact, not verified this, the ACCC confirmed today.
There was no voice coverage in these regional areas but the dodgy operator still flogged services anyway, via a phantom Optus network.
EDirect, now in liquidation, was already given a slap on the wrists for such activities by the the Federal Court in 2008.
The ACCC’s intervened after a complaint from the remote North Queensland Indigenous community of Aurukun where customers were having automatic deductions made from their bank accounts for a phone service unavailable in their community.
Justice Reeves described the conduct as ‘unscrupulous’ and said “I consider the amount of the total pecuniary penalty to be imposed on EDirect should be at such a level as to make it… commercial suicide, for any other operators in mobile telephone industry, or elsewhere, to even contemplate taking the risk of engaging in similar conduct.
“I consider the penalty should act as a general deterrent to companies who use telemarketers in the way that occurred in this case. If such companies, whether mobile telephone companies or others, do not properly supervise and control their telemarketers to ensure that they comply with Australia’s consumer protection laws they can expect to be dealt with severely.”
Rod Sims, chairman of the ACCC said “it is grave and intolerable conduct in the Telco industry. I call on the major telecommunications carriers to take appropriate steps to ensure that their resellers lawfully deal with consumers.”
Sims also issued a stern warning to companies operating in regional Australia:
“Ensuring Indigenous consumers are well placed to exercise their rights is a major priority for the ACCC. We will vigorously investigate breaches and seek large penalties from the Court when breaches impacting on Indigenous consumers are detected.”
The ACCC said it remains “concerned” about conduct in the telecommunications sector in relation to the proper disclosure and clarity of key terms and conditions to consumers and has doled out major fines to big players including a $3.61 million fine against Optus for deceptive conduct.
Whilst EDirect is now in liquidation the ACCC said it has negotiated the payment of over $100,000 in consumer refunds from both EDirect and the company which took over the company’s assets.
