Internet TV Australia Pty Ltd (Receiver and Manager appointed) formerly trading as Free2aiR and its director, Mr James Young, had engaged in misleading and deceptive conduct, unconscionable conduct and harassment and coercion, the Federal Court, Brisbane has found.
The Australian Competition and Consumer Commission had alleged that Free2aiR represented to consumers that:
- the Internet access services supplied by it included free Internet access time
- there was a once-off 'set-up' fee for subscribing to the Internet access services supplied by it
- there were no ongoing fees and charges payable for the Internet access services supplied by it other than a charge for any downloads in excess of a specified amount each month.
The court declared, by consent, the Internet access services supplied by Free2aiR were subject to terms and conditions that were not brought to the attention of potential customers before customer subscribed. The conditions included one that purported to allow Free2aiR, at its discretion, to charge customers a quarterly administration fee in addition to the set-up fee. Some consumers later received 'quarterly administration' invoices demanding further payment for their Internet services and threatening disconnection if they did not pay.
The court declared that Free2aiR engaged in misleading and deceptive conduct and made false or misleading representations in breach of the Trade Practices Act 1974.
It further declared that Free2aiR engaged in unconscionable conduct in breach of the Act in its dealings with customers. This included threatening to disconnect customers if they contacted Free2aiR by telephone to query the imposition of the administration fee and by deducting administration fees from customers' credit cards without express authority.
Free2aiR was also declared to have used undue harassment and coercion by threatening to disconnect customers who failed to pay administration fees. Free2aiR also advised customers that outstanding administration fees would be referred to a debt collection agency for recovery which may involve additional charges and result in damage to the customer’s credit history with credit reference agencies.
The court declared that the sole Director of Free2aiR, Mr James Young, was knowingly concerned in each of the alleged breaches, or aided, abetted and procured each of them.
The Federal Court orders were made by consent of the parties. The appointed receiver did not oppose the making of the orders. The orders also included injunctions restraining the respondents from similar conduct in the future, and costs orders.
"This matter sends an important message to Internet Service Providers, who must ensure that all terms and conditions of internet use are sufficiently brought to the attention of potential customers prior to entering into a contract with the customer", ACCC Chairman, Professor Allan Fels, said today.
"Consumers should be wary when they are selecting an ISP, to ensure that it will best meet their internet needs. Consumers should not sign any contract or agree to receive internet services until they have had the opportunity to read the terms and conditions".