Federal Court Slam Phone Card Companies

The Federal Court in Perth has declared that phone card sellers Prepaid Services Pty Ltd and Boost Tel Pty Ltd have engaged in misleading conduct and made false representations in regard to the value, price, and benefits of their phone cards.

ACCC chairman Graeme Samuel welcomed the court’s decision as a further wake-up call for the industry which has been under close ACCC scrutiny.

The Federal Court in Perth has declared that phone card sellers Prepaid Services Pty Ltd and Boost Tel Pty Ltd have engaged in misleading conduct and made false representations in regard to the value, price, and benefits of their phone cards.

ACCC chairman Graeme Samuel welcomed the court’s decision as a further wake-up call for the industry which has been under close ACCC scrutiny.

“The ACCC has been active in promoting truth in advertising in the telecommunications industry and this action against Boost and PPS in the phone card sector of the market highlights that the ACCC will take court action where companies make misleading representations,” he said.

Prepaid Services Pty Limited is a wholly owned subsidiary of Optus Mobile Pty Ltd, which is a member of the Optus Group of companies. Boost does not have its own telecommunications services but buys telecommunication services through PPS.

The ACCC alleged PPS and Boost contravened the Act by representing that certain phone cards would provide consumers with a specified amount of call time, when that was not the case; and that no fees, other than timed call charges, would apply when in fact other fees were charged.

Additionally, PPS and Boost also represented that a specified rate per minute would apply to calls regardless of the number and length of calls made, when in fact the specified call rate was highly unlikely to be ever achieved.

For example Boost represented that its card offered 1896 minutes of talk time to various countries including the UK and Japan at a flat rate of ½ cent per minute. In fact, the 1896 minutes could only be obtained in exceptional and unlikely circumstances, namely through one continuous call in excess of 30 hours or through a series of calls of exactly one or five minutes duration. A seven minute call to Japan would cost 44 cents and not the 7 ½ cents as expected.

The court has declared Boost’s conduct was false and misleading, has ordered injunctions to prevent similar conduct in the future, ordered Boost publish corrective notices, and to pay the ACCC’s costs. The court has also made declarations and similar orders by consent against PPS.

Samuel said: “It concerns the ACCC that the court has said in this case that the advertising practices by participants in the industry shows that there is a misapprehension among a large number of participants in the industry, as to the norms of commercial conduct prescribed by the Act.”

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