ACCC Still Going After SMS Ads

The ACCC is not letting up going after dodgy SMS providers

After a plethora of complaints over the past couple of years, the ACC is glad the Federal courts are going after companies that provide misleading SMS services, which can cost consumers hundreds of dollars.

The Federal Court has found that advertisements by SMS AMV Holdings Limited, a company based in the United Kingdom, published in Dolly, Girlfriend and TV Hits magazines, were misleading.

“The busy layout of the advertisements appearing in youth magazines, combined with the inadequate and inappropriate use of fine print disclaimers, is misleading and in breach of the Trade Practices Act 1974,” Acting ACCC Chairman, Mr Peter Kell, said today.

“Of particular concern was that the advertising did not adequately disclose the nature of the services being offered and their costs. Consumers would unknowingly be subscribing to an ongoing and costly service rather than acquiring a one-off purchase of a particular ring-tone, wallpaper or game.”

In separate action this week, the Federal Court, at the request of the ACCC, ordered an interim injunction against Clarion Marketing Australia Pty Ltd which distributed millions of scratch cards in popular magazines including New Weekly, Zoo, and TV Week, and major newspapers.

The scratch cards have pictures of valuable prizes and a latex panel, which consumers scratch to reveal three matching symbols and a unique code. Consumers are prompted to SMS the code to a ’19’ number to claim a prize. After sending an SMS, consumers find they are subscribed to a premium SMS service at a cost of $10 every six days.

The injunction ordered by the court requires Clarion to send a free SMS by Friday 19 June 2009 to consumers who attempt to claim a prize, notifying them of the cost of the service and seeking their authorisation to continue prior to commencing the subscription.

The ACCC has filed proceedings in the Federal Court against Clarion seeking declarations that publishing the scratch cards was misleading and deceptive in breach of the Act, as well as an order that Clarion send an SMS to all subscribers notifying them of the outcome of the proceedings and directing them to contact their telecommunications provider.

The ACCC has also taken the following recent actions in response to premium mobile service advertisements:

  • court enforceable undertakings from ACP Magazines and Pacific Magazines, publishers of youth magazines (including Dolly and Girlfriend) to improve the overall standard of advertising for mobile premium services
  • court enforceable undertakings from TMG Asia Pacific for its ‘Text and Win’ services, and commenced legal proceedings in February 2009 against Teracomm Limited, a content provider based in Bulgaria.