ACCC continues crackdown on misleading telecommunications advertising

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The Australian Competition and Consumer Commission (ACCC) has continued its crackdown on misleading telecommunications advertising, fining Optus almost $180,000 last month for representations made in respect of its “Max Cap” mobile phone plansOptus advertised a “$49 Max Cap” plan in July and August 2010.  The ACCC objected to the “Max Cap” terminology on the basis that it implied that the maximum monthly charge was $49.  The advertised price was actually the minimum monthly cost of the plan, with additional charges applying to handset repayments, optional insurance, and some excluded call types.  

The ACCC considered that the advertisements misled consumers about the price of the plans, and were also likely to mislead as to the nature and characteristics of the plans.  The Acting Chairman of the ACCC, Peter Kell, said: “If you advertise a service as a ‘$49 Max Cap’ when $49 is the minimum that consumers have to pay, then you risk breaching the law by misleading consumers about the cost of the service.”  Optus’s advertised claim that plan users could call “anyone” was likely to mislead consumers because certain call types were excluded from the ‘cap’ and subject to additional charges.

Optus explained that it intended the term “Max” to convey the ‘maximum value’ that the consumer would receive from the plan.  When the ACCC raised its concerns, Optus changed the plan name to “Optus Cap” and withdrew the ads.  It also opted to pay a fine in respect of each of the 27 advertisements rather than challenge the ACCC’s finding that it had misled consumers.

This result is one in a long line of ACCC actions focussed on the telecommunications industry which aim to ensure that consumers receive accurate information about the nature and characteristics of services.

“This is another example of the clear message the ACCC is sending to this industry: get your advertisements right,” Mr Kell said.

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