The Federal Court has found that the Yellow Pages 12451 Connect service misled consumers in its promotion and operation.
The service is run by Sensis Pty Ltd (formerly Pacific Access Pty Ltd), a wholly owned subsidiary of Telstra Corporation Limited. The finding follows Australian Competition and Consumer Commission action.
"Yellow Pages Connect is a live operator assisted business referral service to help consumers find products or services when they do not have a specific business in mind or when they have only partial details", ACCC Chairman, Professor Allan Fels, said today . "Callers to the service are able to ask for a search on all or some of a combination of business type, suburb and keywords. Consumers are charged $1.21 per call to the service. If they want to be connected to a business they are charged a connection fee".
The ACCC alleged that Sensis had engaged in misleading and deceptive conduct in relation to what are known as out of area listings and the use of keywords in advertising associated with promotion of the Yellow Pages Connect service. Out of area listings arise because Sensis offers priority advertising for an extra fee, which enables business to advertise their goods or services outside of the area in which they are located. The priority given to priority advertisers can result in their business being the first business to be offered by the Yellow Pages Connect operator to a caller even if it is outside the area requested by the caller and there is a business that which is not a priority advertiser, that provide the relevant goods or services from a location in the area requested by the caller.
The ACCC alleged that the Yellow Pages Connect practice of promoting preference to a priority paying advertiser ahead of and in preference to a non-priority advertiser even where the non priority advertiser might be a better or closer match to the search criteria given by the consumer calling the service was misleading. Of particular concern to the ACCC was that the service allowed priority paying advertisers who carried on businesses outside the geographic location specified by callers to be referred to consumers even where a relevant business existed in the location specified.
The ACCC also alleged that the representation by Sensis regarding the keyword search element of the Yellow Pages Connect service was misleading. Keywords are a significant aspect of Yellow Pages Connect. They enable a priority advertiser, which must provide at least three keywords, to be matched against a caller’s specific request. The entitlement of priority advertisers to specify keywords provides them with a significant advantage over other businesses.
Justice Merkel declared that Sensis Pty Ltd had engaged in misleading conduct, or conduct that is likely to mislead in contravention of section 52(1) of the Trade Practices Act 1974 in relation to the "out of area listings" aspect of the ACCC's case.
Justice Merkel also made an order that Sensis Pty Ltd amend its Yellow Pages Connect Complete Consumer Advisor manual to ask a consumer who makes an inquiry about a business in relation to a particular geographic area, whether the caller wants a business located in the area specified or is content to be given a business that service the area specified.
He did not accept Sensis’ contention that where a caller for whatever reason, requests the provision of goods or services in a particular locality, it is an accurate response to such request to provide that caller with a "match" by providing a supplier of goods or services in another locality, in preference to a supplier of goods or services situated in the locality requested by the caller.
He considered that Sensis had structured the operation of the service not to encourage callers to make or persist in making a request until given an "In-the-area" business. The structure was designed so as to keep calls to the service short so that it remained efficient and profitable for Sensis Pty Ltd.
He noted that: "Sensis’ advertising rules do not require information to be provided as to whether an “Out-of-area” listing for a priority advertiser might result in any additional costs to the consume".
He found that Sensis had contravened section 52 of the Act and was sufficient to find the ACCC’s claim for injunctive relief so he did not believe it necessary to consider whether Sensis had breached other provisions of the Act.
Further, while he did not find that Sensis had contravened the Act in relation to the keywords aspect of the ACCC’s case he did note that: "…the ad hoc updating of information in the data base by Sensis will result in inaccurate information being provided to callers over time".
He expressed the expectation that steps can be taken by Sensis Pty Ltd to ensure that consumers are not misled as to the costs of an “Out-of-area” business and that the information provided to callers will continue to be an accurate response to their requests.
He noted: "When an ordinary or reasonable caller proffers a request giving category, location and keywords, the caller expects to receive an accurate, or the most accurate, response that Sensis is capable of giving from its database in response to that request".
Professor Fels welcomed the decision saying that it is important for consumers who are paying for a service to get what they are paying for.
"A caller using and paying for the Yellow Pages Connect service was entitled to rely upon Sensis to volunteer a caller with an accurate or the most accurate match it is able to give to the search criteria specified by a caller. It is regrettable that Sensis could not accept when first contacted by the ACCC and throughout the proceedings that this was so".
Professor Fels also noted that Justice Merkel had commented that in this case the persons likely to be affected by this conduct or identified itself in own internal documents as mobile phone users, busy customers, consumers from non-English speaking background, tourists looking for information and sight impaired callers. The ACCC remains committed to protecting the interests of vulnerable consumers and sees it as a priority area for the New Year.