We’ve previously poked ACMA’s eye about keeping its thoughts to itself too much, so it’s great to see a move towards a thorough, straight-talking booklet that offers detailed guidance on the regulator’s experience and how it sees things.

“The draft guidelines have been drawn from consultation with telemarketers who have implemented thorough and effective compliance systems, as well as experience gained through ACMA investigations into non-compliance. Put simply, ACMA has looked to industry for what does work, and has observed through its investigations what doesn’t work.”

We’ll certainly be reviewing the draft carefully and making a few suggestions. 

Comments and queries can be directed to robert(dot)urquhart(at)acma(dot)gov(dot)au.  Close date for comments is Friday 13 February 2009.

Just a few weeks after TPG featured a plainly unlawful advertisement on its home page – which it thankfully later corrected – the company has committed another consumer protection faux pas.

This time the problem is the way that two advertisements with plenty of small print cycle every three seconds, making it nearly impossible to read anything but the headlines.

We think it’s a clear breach of clause 4.1.3 of the Telecommunications Consumer Protection Code.

What the TPC Code requires

Clause 4.1.3 of the Code states that:

Disclaimers must be clear and readily understandable, having regard to the type of advertising material, including the medium or format used and its intended audience.

TPG’s cycling offers

Here’s one offer, made static as a screenshot.

And here’s the other:

One has over 45 words, the other more than 50.  It’s simply impossible to read the small print.  Sure, you can go cross-eyed trying to read it over several cycles, ignoring the other offer and trying to disregard the moving graphics.  Great if you can do that, but there’s no way these disclaimers are ‘clear and readily understandable’.

And section 52 TPA is never far away

Section 52 of the Trade Practices Act prohibits business advertising that is misleading or deceptive, or likely to mislead or deceive.

ACCC has made it very clear that it considers unacceptable use of small print as likely to mislead or deceive.  Small print that’s effectively rendered unreadable by flashing on and off as in TPG’s advertisement won’t pass muster under section 52.

And you mustn’t allocate a standard telephone number to a service that doesn’t terminate in the local area the number is intended for.

It’s also simple for customers to bypass both rules, since the majority of VoIP providers couldn’t care less about breaking them.

A new ACMA discussion paper suggests that enforcement action may be on the way.

Non-compliance is no secret

Everybody in the game knows that it’s easy to obtain a Darwin number that really terminates in Melbourne or a Perth number that rings in Sydney.  In fact, a VoIP provider that couldn’t service these requests would be regarded as useless by many customers.

How do you get a so-called ‘geographic number’ that isn’t tied to the location it’s nominally issued for ?  Just phone a VoIP provider and ask.  You’d be unlucky to strike one that declines.

ACMA research proves the point

In May and June 2008, ACMA checked out 46 Australian VoIP service providers and discovered (surprise, surprise) that all except one would provide service with an end user number that belonged to a different location.

Subscription processes for … these services were examined in detail. In all cases, except one, geographic numbers were issued to customers for locations other than the geographic location of the customer’s service. In the research a Clayton (Vic) based customer automatically received numbers from the Melbourne Standard Zone Unit (SZU), the Perth SZU and the Sydney SZU. A Ringwood (Vic) based customer was able to request numbers in Alice Springs, Brisbane, Perth and Sydney. In addition, ACMA investigated a selection of the IPND records for these services. The results suggested further problems with non compliance.

ACMA has no evidence that would suggest the results for those providers not examined in detail would be markedly different. Rather the non compliance that this research identifies appears to be evidence of a systemic problem.

What’s ACMA going to do about it ?

First, educate

The discussion paper is partly intended to remind service providers of the Numbering Plan and its rules.

Second, reform

ACMA is considering regulatory changes that will clarify and perhaps simplify compliance.

For instance, one possibility under consideration is a ‘Small Provider Integrated Number System, (‘SPINS’) that would allow small service providers to obtain single telephone numbers from ACMA or an outsourced provider rather than by the current arrangement of sourcing number from an upstream provider.

SPINS would be a good outcome, but ACMA indicates it’s only an option if the industry registers broad support.

This would discipline number allocation by creating a direct link between small providers and ACMA.  At present, many of them are invisible to ACMA, separated by upstream providers who share their numbering allocations with them.

Third, enforce

The discussion paper makes it clear that the Numbering Plan will ultimately be enforced, perhaps even by withdrawing numbers allocated to non-compliant service providers.

Comments on possible reforms are invited

Submissions must be received by ACMA by 28 February 2009.

Submissions must be sent to:

Manager Telecommunications Licensing Numbering and Subcables Section

Email          numbering@acma.gov.au ; or

Mail             Australia Communications and Media Authority

PO Box 13112, Law Courts

MELBOURNE VIC 8010

Our take on it

Based on its research findings, ACMA could have justified a ‘big stick’ response.  But it has shown its support for a diverse VoIP market by taking a measured, cooperative approach.

However providers that are building a business on flouting the underlying principles of the Numbering Plan, and especially the rule that geographic numbers need to support services situated in the zones they are listed for, are ultimately doomed.  They will be pulled out of service before too many months have passed.

The Communications Minister Senator Conroy has recently called for ISPs to volunteer for internet filtering trials, that may lead to eventual universal ISP level internet filtering across Australia. The Government claims that the ISP level filtering will alleviate the evils of the internet, including child pornography.

Most people within the industry will agree that the availability of internet filtering is a good thing, but at a local level on individual PCs, not at an ISP level. The previous government had the right idea, to provide free filtering software to protect the community, even if its filtering software was controversial.

Opponents of the filtering plan point out that ISP level filtering will be ineffective, as much of the illegal and harmful content is propogated through peer to peer networks, which will be outside the scope of the proposed filtering.

We see the greatest contradiction in the Government’s position (in this debate) being in its election call for faster internet speeds, yet the proposed filtering is likely to have a negative impact on internet speeds.

The Government should stay true to its word and look at alternatives to ISP level filtering, which is likely to do no more than slow the internet, reducing productivity in hard economic times.

This myth is based on a misunderstanding of the process behind codes and the reasoning behind the process.

Communications Alliance Codes sure aren’t just voluntary.

The confusion arises because the Telecommunications Act tries not to be heavy-handed on this topic.  But there’s a gloved hand not far away.

The process

The Act allows for industry codes to be worked out by an industry group, and then submitted to ACMA.  If ACMA approves the code, it registers it.

After that, the hope is that CSPs will fall into line.  And it’s true that there’s no immediate penalty if they don’t.

What if an ISP won’t comply with a code ?

Once a code is registered, section 121 of the Telecommunications Act allows ACMA to issue a direction to a CSP to comply with it.

A breach of a direction then becomes a breach of the Telecommunications Act as well.

After that, failure to comply isn’t healthy for the CSP.  Penalties for breaching an ACMA direction to comply run up to attracts penalties of up to $250,000 for companies and $50,000 for individuals who are involved.

Are ACMA directions common ?

ACMA only issues directions when a CSP won’t ‘voluntarily’ comply.  Even then, it probably only acts on the basis of customer complaints.  The code scheme is indeed intended to be ‘light touch’.

But for instance, in February 2008 ACMA directed Dodo to comply with the complaints handling and billing codes.  This followed a TIO request to look at Dodo because of a rising number of complaints it was receiving.

Quoting from ACMA’s media release:

Industry codes bind industry participants to agreed processes and behaviours that should result in improvements in consumer’s experience with the telecommunications industry.

ACMA will take all steps necessary to ensure that consumers receive appropriate and adequate protection and that industry participants are meeting their obligations.

So, ACMA certainly believes its codes are ‘the law’

This is a myth that should be thoroughly buried

The myth is widespread, and some amateur ‘experts’ loudly assure novices that CSPs can’t be held to account for code non-compliance, since the codes are ‘just industry codes’.

We’ve also seen arguments that the codes only apply to telcos (and not ISPs) or vice versa.  Nonsense.  Unless a code specifically says otherwise, ‘CSP’ means a ‘carriage service provider’ i.e. a telco and / or ISP.

Finally, we’ve seen people advising others that codes only apply to telcos that hold carrier licences.  Bunkum.  A ‘carrier’ and a ‘carriage service provider’ are different things.  Sure, many carriers also act as CSPs, but not all CSPs are carriers.  In fact, most of them are not.

Misinformation is unhelpful

The problem with this myth is that it discourages aggrieved customers from asserting their code rights.  So they don’t complain.  So TIO / ACMA never get the full picture.  So the CSP gets away with non-compliance.  So the ‘experts’ assume that the codes are voluntary, and advise more aggrieved customers accordingly.

It’s time to start giving out accurate information about the codes and their status.

For consumer and small business contracts, that simply isn’t true.  If there’s nothing more to it, the credit management rules in the Telecommunications Consumer Protection Code preclude a CSP from immediate action.

Not much commentary required on this one … we’ll let the TCP Code speak for itself.

CSP obligations before disconnection

A Supplier must:

(a)    make reasonable attempts to Inform a Customer of a decision to Disconnect the Customer’s Service, at least 7 Days prior to Disconnection;

(b)    in Informing the Customer:

(i)    indicate the earliest date on which the Disconnection could occur; and

(ii)    include the date of issue of the correspondence, if they are Informed in Writing;

(c)    at the Customer’s request, promptly review its decision to Disconnect;

(d)    send a separate Disconnection notice, not just a Bill, in Writing to the Customer prior to Disconnecting the Service, unless the Customer was previously advised in Writing under clause 7.4.7 or 7.4.9(a);

(e)    prior to Disconnecting, make reasonable attempts to Inform the Customer and any Guarantor:

(i)    of all consequences to them of non-payment;

(ii)    that default information may be used for internal purposes;

(iii)    of any process enabling Customers to arrange a repayment plan for outstanding amounts following Disconnection, prior to the Supplier commencing external recovery or legal action;

(iv)    in Writing that:

(A)    their telephone number may no longer be available after Disconnection;

(B)     default information may be disclosed to external parties or a Credit Reporting Agency;

(C)     the debt may be referred to an external collection agent; and

(D)     legal action may be taken to recover the unpaid debt.

Got it ?  Instant disconnection is not a standard option.

CSP obligations before suspending or restricting service

A Supplier:

(a)    may only Suspend or Restrict a Service without Informing the Customer if the Supplier:

(i)    assesses that the Customer or the account status presents an unacceptably high credit risk to the Supplier; or

(ii)    reasonably suspects Fraud or attempted Fraud.

And in case you were wondering:

‘Inform’ means advise:

(a) in Writing; or

(b) verbally and confirm and record to provide an auditable record.

‘Writing’ means a document sent by the Supplier to the last known:

(a)    address; or

(b)    email address or facsimile number the Customer has agreed to use instead

of the Customer or, where relevant, the Guarantor, in the Supplier’s records.

So there’s a lot more to it than (to paraphrase some ‘knowlegable’ Whirlpool user) if you don’t pay on time they’re entitled to cut you off.

Many ISP and telco contracts contain a term to the effect that the service provider can change the contract at will.  It’s normally followed up by something like ‘so you must check this T&C page frequently.’

The truth:  In consumer and small business contracts, this kind of term isn’t permitted.

A typical example

Consider these clauses, from TPG‘s current standard terms:

The Customer agrees to be bound by TPG’s Standard Terms and Conditions as displayed at the TPG Internet web site www.tpg.com.au. The Customer understands that TPG’s Standard Terms and Conditions can be amended from time to time and the Customer should visit the TPG Internet web site regularly to be aware of any changes.

Customers should note that these Standard Terms & Conditions and the additional Package Conditions may be revised at any time by way of update on the TPG Internet web site – www.tpg.com.au. Customers are bound by any revisions as at the date they are displayed and should regularly examine the current Standard Terms & Conditions and the additional Package Conditions displayed on the TPG Internet web site.

What’s the problem ?

Well, there are two.  (And if TPG operated under a Standard Form of Agreement, there’d be three.)

The relevant laws are:

• the Telecommunications Consumer Protection Code
• in Victoria, the Fair Trading Act.

TCP Code

This is a Federal code that applies to contracts between ISPs / telcos and their consumer/ small business customers.

It includes protections against unilateral and immediate contract changes.

Clause 5 of the TCP Code says: ‘A clause in a consumer contract must not be unfair.’  ‘Consumer’ is defined to include small business for this purpose.

Then it goes on to indicate kinds of terms that will be unfair, including terms that:

permit the Supplier to unilaterally amend or vary the characteristics of goods or services, including price, in a Consumer Contract with a Fixed Contract Period without:

(A) at least 21 days Written Notice to the Consumer;

and

(B) offering the Consumer the right to terminate the Consumer Contract within 42 days of the date of the notice without incurring charges, other than usage or network access charges to the date the Consumer Contract ends and outstanding amounts for installation or for equipment compatible with other Suppliers’ services.

There are limited exceptions, but the general rule is clear.  A CSP just can’t say: ‘We can change the deal instantly by changing the web site, and you remain bound by it.’

The Victorian Fair Trading Act

Part 2B of this Act is a statutory rule against unfair terms in consumer contracts.  The regulator Consumer Affairs Victoria (CAV) used this law to punch up AAPT in 2006.

CAV is convinced that a clause which allows uncontrolled unilateral variation of a contract is unfair within the meaning of its Act.  It takes an even harder line than the TCP Code on this point.  It won’t even agree to an exception for minor variations.

If CAV required TPG to change its variation term for Victorian contracts, and TPG refused, you can bet your socks that CAV would take them to court.

The AAPT decision

Victoria’s VCAT Tribunal agreed with CAV on this point.  Here’s the relevant AAPT contract term, and what the Tribunal said about it:

The AAPT term:  ‘We may vary any term of this Agreement at any time in writing. To the extent required by any applicable laws or determinations made by the Australian Communications Authority (ACA), we will notify you of any such variation.’

The Tribunal judgment:  ‘This term is unfair because it permits  AAPT , but not the customer, to change the contract unilaterally. The term has the effect of permitting  AAPT , but not the consumer, to avoid or limit the performance of the contract: see section 32X(a) of the Fair Trading Act.

AAPT  pointed to the fact that it has no mobile phone network of its own, but simply resells services supplied by Telstra, Optus and Vodaphone. Under the terms of  AAPT ‘s supplier contracts, terms may be imposed upon  AAPT  on relatively short notice, which might make it commercially necessary for  AAPT  to seek changes consequential upon new terms imposed on  AAPT.

Be this as it may, it provides no justification for a term as broad as clause 1.3, which permits  AAPT  to vary any term of the agreement, at any time, for any cause.

Or that the Australian law can also apply to offshore marketers ?

mBlox, which describes itself as ‘the world’s largest mobile transaction network’ now knows it, following an $11,000 ACMA penalty.

What mBlox did

According to ACMA, mBlox sent a significant number of commercial electronic messages promoting a premium ringtone download service to mobile phones, on behalf of a premium mobile content provider, without providing notification of how to unsubscribe from receiving more messages.

Is that wrong ?

Under Australia’s Spam Act, ‘commercial electronic messages’ count as ‘spam’ … and that includes SMS.

If you send ‘commercial electronic messages’, including SMS, each message must:

• be sent with the recipient’s consent
• include clear and accurate sender identification, and
• offer a functioning unsubscribe mechanism.

mBlox didn’t include the unsubscribe option in its messages.

But isn’t mBlox a US outfit ?

Yes, it is.  But Australia’s Spam Act applies to all marketing that has an ‘Australian link’, and that includes when ‘the computer, server or device that is used to access the message is located in Australia’.

ACMA used its ‘infringement notice’ powers

Similar to an ‘on the spot’ speeding fine, an ‘infringement notice’ is an official allegation of breach of the law.  The recipient can pay the penalty, and that’s the end of the matter, or they can decline to pay.  If the authority wants to take it any further, it will then issue court proceedings.

One downside of not paying is that the court’s level of fines is much higher.  If you lose, you are likely to pay a lot more.

It ends an information drought for Australian businesses that use contract call centres for telemarketing.

As a regular contributor to the coffers of the Telecommunications Industry Ombudsman, Dodo is no stranger to regulatory imposts.  But the speed at which big Do Not Call fines can accumulate should alarm even the most blasé operator.

Just 67 non-compliant telesales calls translated into a $147,400 penalty.

You read it right:  67 calls = $147,400

According to a written undertaking the company has provided to regulator Australian Communications and Media Authority (ACMA), ACMA’s investigation turned up 67 calls in a three month period to homes that should have been immune thanks to their registration on the national Do Not Call list.  Those calls have translated into a penalty of $147,400.

Call it a cost of $2,200 per call or annualise it at around $600,000 a year.  Any way you look at it, it’s a scary number especially for a first offence.  Just imagine the hole that 670 or 6,700 unlawful calls would punch in a bottom line.

ACMA comes out of the closet

Even more interesting than ACMA’s hard line with Dodo is that the regulator has finally come out of the closet on some of its opinions about how to comply with the Do Not Call Register Act.  For some time now, the authority has been developing private views about what a business needs to do when it engages a contract call centre for a sales campaign.  Until now, it hasn’t gotten around to letting business into the secret.

CSPs responsible for the sins of their outsourced telemarketers

Basically, the Do Not Call Register Act says that if a contract call centre breaches the Act, the customer who engaged it is also liable unless it used reasonable efforts to prevent the breach.  The Act is worse than silent as to what might constitute due diligence.  It mandates a puny clause that must appear in any outsourced telesales contract.  Many enterprises have understood the inclusion of the clause to be all that’s required.

ACMA sets the bar high

Even if the standard clause is only a starting point, it gives no hint of the lengths that ACMA privately considers are required.  Neither does the authority’s web site, or the Do Not Call Register site it auspices.  Nor, as far as we know, has any public utterance of the regulator until Dodo’s written undertaking appeared online with a media release.

Undertakings are extracted by regulators like the Australian Competition and Consumer Commission and ACMA as substitutes for court orders. Although they often set higher standards than a business might adopt if it hadn’t already been caught out legally, they still shed valuable light on what the regulator reckons proper practice to be.

How does your telemarketing contract measure up ?

So if you have a contract telemarketing arrangement in place, see how you stack up against the following benchmarks gleaned from the Dodo document.

Does your contractor provide regular reports of all numbers called and which of their staff made each call ?  Do the records include whether each call was answered and its duration ?  Are these records retained for at least a year ?

Do you know which phone companies carry your contractor’s calls ?  Is there a system for recording that information for at least a year afterwards ?

Are all call centre staff trained in compliance with the Act ?  Are there systems to ensure caller identification is turned on at all times ?  If someone calls back the displayed number, will they easily reach a representative of your organisation ? Absent these kinds or processes, ACMA is likely to sheet home blame for any call centre misconduct to you.

But wait, there may be more …

Unfortunately, it’s not at all clear that ACMA’s expectations are exhausted by the Dodo documents.  We have heard suggestions that clients of call centres should audit called number records against the official register, a tricky assignment since the register will have changed since the calls were made.

Come on ACMA, share the secret

In time court rulings will clarify what’s required but like the Australian Taxation Office, ACMA is well placed to discourage court challenges.  With maximum penalties that read like telephone numbers and the risk of a quadruple or nothing outcome from a court, most businesses will compromise rather than test ACMA’s positions in court, which is why we’d like to see those positions articulated more transparently.  If the authority has some good ideas about how to comply with the law, let’s hear them as positive advice rather than deduce them piecemeal from undertakings like Dodo’s and one liners in media releases.

They’re talking about the Telecommunications Consumer Protection Code, a consolidation of six previous codes that had become topsy-turvy.

3 has shown leadership by voluntarily signing up to the TCP Code.  But providers who don’t sign on the dotted line still can’t ignore it.

Signing up to a Code is largely a PR exercise

There’s no law that forces a phone or internet provider to sign the register and bind itself to the Communications Alliance consumer protection code.  But you may get brownie points for taking the extra step.

But you can’t avoid the code by not signing up

ACMA has power to direct any provider to comply with a code – see section 121 of the Telecommunications Act 1997.

After that, failure to comply is a breach of the Act, and attracts penalties of up to $250,000 for companies and $50,000 for individuals who are involved.

You’d need to behave pretty badly to put yourself in that position, but the point is that non-signatories do indeed need to keep code compliance in mind.

3 has audited its systems and taken the plunge

It would be embarrassing, to say the least, for a company to sign up for code compliance and be found guilty of a swag of breaches.  So 3 has audited its processes and is satisfied that it has robust compliance in place.

According to the Communications Alliance’s media release, Michael Young (Director, Technology and Customer Services at 3) said: ‘With the establishment of this single code, it makes it easier for 3′s customers to know their rights and ensures that 3′s business practices, procedures and staff training are in line with the requirements of this and other industry codes.’

Call a CSP Central expert of you want to know more about CA Codes and code compliance

Peter Moon has been advising on code compliance for more than 5 years.