The Federal Court today declared that Telstra Corporation Limited engaged in misleading and deceptive conduct when advertising its pre-paid long distance 'Say G’day' calling card product.
The Australian Competition and Consumer Commission action follows an investigation into complaints of hidden call charges and fees incurred by consumers using the Say G'day card's "FREECALL 1800 099 032" phone number to make long distance calls.
Telstra estimates about 60,000 'Say G’Day' calling cards are sold each month.
The ACCC investigation showed that, contrary to Telstra's representations that the 1800 number was "free" and the impression that the costs would not be a significant part of the overall charges, the 1800 number had a cost of 53 cents per minute, plus the advertised long distance call rates.
The court agreed that consumers would not expect a 'FREECALL' service to attract such significant charges.
"The charges that Telstra hid from customers were significant – for instance, a call made to Ireland using the so-called 'FREECALL' number was in fact charged at almost 10 times the advertised rate", ACCC Chairman, Professor Allan Fels, said today.
"Even if only three per cent of the calls on the Say G'day card used the 1800 number, this means almost 2000 cards per month were used to make long distance calls via the 1800 number by consumers who may have thought the 1800 access was free.
"The ACCC is receiving an increasing number of consumer complaints about pre-paid services. Consumers are particularly vulnerable to hidden charges with these services as they don't receive a bill and cannot scrutinise call charges.
"It is therefore very important that companies offering such services are upfront about all applicable costs".
The court made orders restraining Telstra from continuing to make misleading claims in relation to the costs associated with the calling cards.
Telstra also offered undertakings to the ACCC, including a commitment to review its trade practices compliance procedures. Telstra has undertaken to waive the 53c per minute charge until corrected cards, vouchers and promotional materials are distributed to retailers.
The undertakings should protect consumers from any continuing adverse consequences arising from the misleading claims.