Optus Pay Massive Fine For Misleading Consumers
- Largest penalty ever for consumer protection matter
- Consumers didn’t know that data speeds were limited after exceeding allowance
- Affect “Think Bigger” and “Supersonic” ad campaigns
The Federal Court has today ordered Optus to pay $5.26 million in civil pecuniary penalties for breaches of the Trade Practices Act 1974 through the advertising of its various ‘Think Bigger’ and ‘Supersonic’ broadband internet plans.
Justice Perram said "Such a penalty will operate as an appropriate deterrent not only to Optus but also to other traders who might be tempted by the thought that misleading advertising is a profitable strategy. These penalties will demonstrate that it is not."
“The court has just handed down the largest civil penalty for a consumer protection matter” ACCC Chairman Graeme Samuel said today. “This is a great result for consumers and the ACCC. The court is punishing a company that disregarded the law and misled consumers. This decision sends the clear message that misleading consumers is not a legitimate business strategy. Optus is not a small business, but a large company that engaged in misleading and tricky conduct. The entire telecommunications industry needs to sit up and take notice. This conduct is not acceptable, and the ACCC will seek the harshest penalties the law allows.”
In advertising these broadband plans, Optus represented that for a monthly payment, a consumer would receive a headline data allowance of broadband which was then split into peak (midday to midnight) and off-peak (midnight to midday) data allowances.
The Australian Competition and Consumer Commission alleged that Optus had not sufficiently disclosed that the service would be speed limited to 64kbps at all times once a consumer exceeded their peak data allowance. The consequence was that any unused off-peak data would no longer be available at a broadband speed.
Optus launched the "Think Bigger" campaign on 25 April 2010 and the "Supersonic" campaign on 2 August 2010. Optus advertised these plans through a number of media, including television, newspapers, billboards and direct marketing through the yellow envelope.
The plans dealt with in these proceedings are the “Think Bigger” Internet broadband plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $49.99
- 150GB of data (75GB peak + 75GB off-peak) for $59.99, and
The “Supersonic” Internet broadband with Premium Speed Pack plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $69.99
- 150GB of data (75GB peak + 75GB off-peak) for $79.99
- 170GB of data (85GB peak + 85GB off-peak) for $89.99.