Optus’ Think Bigger campaign brought back to size

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Singtel Optus Pty Ltd has been found liable for ‘serious’ contraventions of section 52 of the Trade Practices Act 1974 (Cth) as a result of misleading advertising about its internet plans.

Justice Perram in the Federal Court upheld the Australian Competition and Consumer Commission’s (ACCC’s) claims that advertisements for the ‘Think Bigger’ and ‘Supersonic’ internet plans were misleading due to their failure to properly disclose the usage limits of the plans. As a result, Optus has been restrained from running the advertisements and been subjected to corrective advertising orders.

Under the ‘Think Bigger’ plan, Optus offered consumers a theoretical maximum download limit of 150GB, split into two 75GB allowances for peak and off-peak times, for $59.99 per month. When the peak allowance was exhausted, the service would be reduced to 64kbps for all internet use, even if some of the off-peak allowance remained. This was explained in the terms and conditions of the plans. Advertisements for the ‘Supersonic’ plan were similar in nature and content.

The ACCC claimed the advertisements failed to disclose that:

1. internet usage would be limited once the peak usage allowed was exceeded;
2. speed would drop to 64kbps if the allowance was exceeded; and
3. 64kbps is not a broadband speed.

Optus argued that because the plan was split into peak and off-peak components, consumers were put on inquiry about the limitations of the structure of the service, prompting them to read the terms and conditions. Moreover, any misconceptions would be corrected at the point of sale. Given the nature of the service, consumers were unlikely to make ‘impulse purchases’ in reliance on a single, rather simple advertisement without proper consideration of the plan. Finally, Optus argued that broadband consumers should be taken to know the way broadband plan structures work, including the substantial speed limit that is imposed after allowances are exceeded.

In relation to the ACCC’s first claim, Justice Perram agreed that the plain language of the advertisements, combined with the name ‘Think Bigger’ and the accompanying images of a moose with oversized antlers would convey to ordinary, reasonable consumers of broadband services that they would simply receive 150GB for $59.99 per month. The court accepted that a ‘sophisticated’ or ‘exceptionally gifted’ individual, after carefully reading the terms, might understand the true structure of the plan. However, such an understanding was beyond that of an ordinary, reasonable consumer. It did not matter that any misconceptions might be later corrected, as this would not overcome the misleading nature of the advertisements themselves.

However, Justice Perram did not uphold the ACCC’s second and third claims. His Honour accepted that in this case the relevant consumer class is the ordinary or reasonable consumer of broadband services. These consumers are taken to understand that broadband plans have usage limits which, if exceeded, will lead to considerable inconvenience. No reasonable consumer of broadband services would expect ongoing broadband speed service after exceeding the usage allowance. It was therefore not incumbent on Optus to alert consumers to this fact more prominently than it had done in the advertisements.

The case is a good example of the dangers of relying on “small print” disclaimers when the overall impact of the advertisements creates a contrary impression with the consumer audience targeted.

Contact Details

Melbourne

Dan Pearce
Partner
T: +61 (0)3 9321 9841
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Marilyn Awad
Senior Associate
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Brisbane

Paul Venus
Partner
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Sydney

Ian Robertson
Partner
T: +61 (0)2 8083 0401
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Sonia Borella
Partner
T: +61 (0)2 8083 0412
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