Way back in December 2008, we highlighted a seriously misleading statement in TPG’s Mobile Fair Go policy.

Five months later, it’s still there, and still breaching section 53(g) of the Trade Practices Act 1974.

The difference is that, since last December, TPG has given a court-enforceable undertaking not to engage in misleading or deceptive conduct.  It’s playing double-or-nothing by maintaining this untrue statement on its web site.

The misleading statement

 Here’s what TPG’s Fair Go policy continues to say as at the date of this post:

21.3 If your mobile is no longer under warranty and you are not covered by insurance you will need to pay for the cost of the repairs.

As we’ve explained at length before – as has ACCC – that simply isn’t correct.  And mis-stating consumer remedies is a big no-no under the anti-misleading conduct rules of the Trade Practices Act.

ACCC Chairman Graeme Samuel can’t be much clearer than this:

‘It is highly unsatisfactory, if not illegal, for companies to make strong headline claims about their product and then seek to improperly qualify those claims in an avalanche of fine print … The ACCC has drawn a line in the sand in relation to the poor advertising practices of telecommunications companies.  The industry is squarely on notice .’

Yet one of TPG’s front page offers remains very unclear about what you get for your money.

TPG’s headline

Here’s one of the flash media offers that greets visitors to TPG online:

OK, what do I take away from that ?  An offer of $300 worth of calls, text and data for $19.99 a month.  Sure, there are some exclusions, but they won’t seriously change the basic deal … will they ?

The click through page

Hmmm … here’s what we find when we click the first screen:

So, the $49 Cap Saver Plan offers ‘included data’ – which sounds like what we read on the front page – but no ‘free data download’.  Hmmm, what’s the difference between ‘included data’ and ‘free data download’ anyway ?  To make it even more obscure, the same page advises:

We recommend using 3G handsets with the Premium and Executive Mobile Cap Saver plans to take advantage of included Free data.

So now, in addition to ‘free data’ and ‘included data’ we have ‘included free data’.  And the plan doesn’t include the first but does include the second, and who knows about the third ???

But if the ‘included data’ isn’t free, then what does it cost ? Certainly nothing on the page containing the table throws any light on the question.

So on we pushed

On we went to the Call Rates page.  No luck there either.  Maybe in the standard terms ?  Nope.

Look, there may be an answer somewhere, expressed somehow, on the site.  But remember we started this search because we were attracted by an advert that flashed out:

If data chews through that $300 allowance at, say, $8/GB, it’s a great deal.  If the rate is $1,000/GB it’s a terrible deal.  And despite looking carefully, we haven’t been able to discover what rate does apply.

That’s why CSP marketing staff need to listen up when the ACCC Chairman says:

‘I made it very clear when I addressed the Australian Telecommunications Users Group on 13 March 2009 that the ACCC has drawn a line in the sand in relation to the poor advertising practices of telecommunications companies.’

But how sorry can we be for TPG, whose advertisements in late 2008 could hardly have seemed more determined to sail close to the trade practices wind, and beyond ?

Now ACCC has taken the company to task.  We’ll explain what happened and its consequences in plain english.

Anyone could see it coming

In November 2008, CSP Central reported an unqualified and untrue TPG advertisement for a $59.95/month ‘unlimited calls & text’ mobile plan.

A couple of weeks after we blew that whistle, the advert was improved but not cured, by at least stating basic qualifications.

In December 2008, we pointed put another TPG ad that wouldn’t please the regulator.  By January, that one was repaired.

Surprise !  Surprise !

On 11 February 2009, ACCC announced that TPG has been pinged for falsely advertising a $59.95/month ‘unlimited’ plan between September and December 2008.  And yes, it’s the one we highlighted in November. 

What ACCC says

The ACCC contends that TPG made false representations and engaged in misleading and deceptive conduct in contravention of sections 52 and 53 of the Act by representing in its advertisements that the Unlimited Cap Saver plan:

• includes unlimited calls and text for $59.99 per month when, in fact, there are multiple exclusions to the plan (including calls to 1800, 13 and 1300 numbers, directory assistance, international calls and SMS, calls to MobileSAT, premium SMS, and calls to operator assistance), and
• is available for the purchase price of only $59.99 per month when, in fact, the minimum charge for the Unlimited Cap Saver Plan is $79.99 due to an additional $20 SIM card fee payable on registration.

What does TPG have to do about it ?

Enforceable undertaking

TPG has given an enforceable undertaking to ACCC.  Basically, that equals court orders.  If TPG breaches it, it’s equivalent to breaching a Federal Court order.

The big one

In some court cases, the Federal Court has said that it’s asking too much to require a company to undertake not to say or do anything misleading.  The normal law says companies must not do that, but the extra penalties that are incurred by breaching orders should only be attached to quite specific behaviour.

Well, either (a) TPG has been very badly advised or (b) its advertising history has been so poor that it was well advised to give a broad undertaking and keep ACCC happy.

TPG is now one of the few businesses in Australian history that has given a broad, enforceable undertaking not to engage in misleading or deceptive conduct.  This is a huge undertaking to be tied to.  It raises the company’s legal risk profile to extreme levels.

Corrective notice in website

Next, TPG must publish a lengthy corrective notice on its website. owning up to its dodgy advertising.

It only admits that TPG ‘may’ have contravened that law.  That shows the benefit of cooperating with ACCC when you’re wrong.  They may at least allow you the dignity of saying you ‘may’ have acted illegally. 

Trade Practices Compliance Program

This is a standard ACCC requirement:  a three year organisational training and compliance program.  It’s a costly and serious business. 

Our take on it

Dodgy advertising isn’t just bad because it harms consumers.  It also disadvantages CSPs that play by the rules.  Why should TPG enjoy customer and revenue growth based on tricky adverts ?

This undertaking puts both TPG and ACCC under pressure, of different kinds.  TPG can be caned for future breaches of honest advertising law.  But ACCC needs to use the cane if occasion requires.  If TPG gets away with more ‘clever’ advertising, ACCC would discredit the enforceable undertaking process.

In December, we picked up another TPG home page blooper.  Again, it’s been repaired.

Maybe somebody at TPG is reading CSP Central. 

 
The December issue was a pair of offers in Flash that cycled every three seconds.  Unless you were a speed reader, with great concentration at that, there was no way you’d appreciate all the small print in either ad.

Fortunately, TPG has banished the flashing Flash and substituted a plain, readable single offer.

No commentary required here, except that flashing Flash might look good, but it’s not a good look legally for making disclaimers clear and understandable.

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.

Following November’s outrageous website advertisement, TPG has been found with a clear breach of section 53(g) of the Trade Practices Act in its standard terms.

We were looking at TPG’s ‘Fair Go’ policy

We searched out TPG’s Fair Go policy for a post about its November / December website offers.  But a couple of paras below in TPG’s T&Cs we found this howler:

Warranty

Early Life Failure (ELF)

The Elf warranty covers mobile phones in the first 14 days of use. If the mobile phone fails during this time, this warranty provides for a replacement mobile. Please check the warranty documentation that came with your mobile phone to see if it’s within the ELF period. If you are eligible to make a claim, please contact the place of purchase immediately.

Manufacturer’s warranty

The equipment we supply is covered under the Manufacturers warranty. Details of the warranty are included with your mobile phone. (Most mobile phones come with a 12 month warranty and a 6 month warranty for batteries.)

Please note warranties do not cover physical, liquid or sun damage or unlocking or programming. Additionally they do not cover loss or theft.

If your mobile phone is older than the ELF period, check the warranty documentation for information on the standard manufacturers warranty and for their recommended local service centres. Remember to take a copy of your Proof of Purchase to the service centre and remove your SIM card and /or accessories.

If your mobile is no longer under warranty and you are not covered by insurance you will need to pay for the cost of the repairs.

Sorry, TPG, but this is seriously illegal

We’ll explain it slowly.

• If you’re selling mobile handsets to consumers, the Trade Practices Act says they come with an implied condition that they are of merchantable quality.
• It says that you cannot limit that implied condition in any way.  If a contract term says otherwise, it is void.
• It says that if you tell customers untrue things about their legal rights, you breach the Act.
• And it says that a breach of that kind is a criminal offence.

Does that mean your handset is under warranty forever ?

No.

It just means that it has to last and perform as long as a handset of ‘merchantable quality’ would.

If I buy a $5,000 armchair, I don’t expect it to last a thousand years, but I certainly expect the frame to stand up to normal use for ten years, maybe twenty, maybe more.

If I buy a handset, I don’t expect it to fall to pieces in 13 months. Does merchantable quality imply five years, or three, or maybe two ? That’s what courts have to decide in the rare cases that go that far.

But what’s clear is that a trader must not tell people: ‘There’s a 12 month manufacturer’s warranty and after that you must pay for any repairs.’ That’s a serious offence.

Don’t take our word for it

Here’s what Victoria’s Consumer Affairs watchdog has to say:

Can traders limit their liability ?

No. Although you can share the liability for a faulty item with the manufacture, it is ultimately your responsibility to resolve the complaint.

As a supplier, retailer or manufacturer you can’t limit your liability by excluding, modifying or restricting the rights and remedies available to customers under the law in any way, for goods that are normally purchased for personal or household use.

Significant penalties exist for anyone found guilty of making statements that are false or misleading to customers about their rights.

You’re not alone, TPG

In 2004, the ACCC released ‘Shopping online – rights and obligations when trading over the internet‘. It found that over half of the active sites had exclusion clauses, limitations of liability and disclaimers that were likely to contravene the Trade Practices Act, especially section 52 and section 53(g).

And CSP Central has already explained how poorly Dodo and Best Buy Australia understand this important area of CSP law.

The company has now changed the advert to come closer to legal compliance.  We still think the ads are obliged to mention that a ‘Fair Go‘ policy applies.

But maybe it’s just as well the policy isn’t linked to the ad.  It sits next to a trade practices law howler that is better kept out of public view.

The two advertisements

As we reported, the November advertisement was entirely unqualified.  It promised a mobile with unlimited calls and texts for $59.99 a month.  Full stop.

TPG's November offer ... too good to be true

Somebody at TPG woke up to the fact that this wasn’t the truth, so a new version has replaced the old one.  Unsurprisingly, it includes qualifications and disclaimers.

By December, some legal common sense had prevailed

The Fair Go policy should be disclosed in the advertisement

If you go digging, you’ll fine TPG’s ‘Fair Go’ policy online as part of TPG’s T&Cs.  But it’s such a significant part of the deal that it should be included in the ad, and hyperlinked.

But the Fair Go policy sits beside a serious legal breach

Jus a few lines below TPG’s Fair Go policy, we noticed a trade practices howler.

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.