Hutchison 3G Australia Pty Limited has given court-enforceable undertakings to the Australian Competition and Consumer Commission to resolve the ACCC's concerns over Hutchison advertisements and promotional aspects of its mobile phone deals.
"The ACCC's concerns related to two separate representations", ACCC Chairman, Mr Graeme Samuel, said today. "The first related to the variation of the $99 Talk Cap and Free 10 offer by Hutchison, and the second to the advertising and promotion of a handset upgrade offer".
In August 2003, Hutchison introduced the Rate Guarantee which provided that the rate offered on certain rate plans would not be increased for two years from the date the customer connected to one of the plans. In June 2004, Hutchison varied the fair use policy relating to the $99 Talk Cap and introduced a fair use limit for the Free 10 offer.
"The ACCC believes representations made by Hutchison that its rates or prices were guaranteed for two years, when Hutchison subsequently varied its fair use policy and imposed a fair use limit, may have contravened the consumer protection provisions of the Trade Practices Act 1974".
Hutchison has given court-enforceable undertakings that it will:
- withdraw and cease use of the term "rate guarantee", "price guarantee" or similar unless the term is appropriately specified
- offer specified customers, a call rate discount on all calls exceeding either the original $99 Talk Cap and/or Free 10 offers, and
- strengthen its existing corporate trade practices compliance program to ensure similar potential breaches of the Act do not occur in the future.
"Consumers complained to the ACCC that they had signed on to contracts which offered a rate guarantee only to find that the value of the rate plan had changed.
"These undertakings represent a commitment from Hutchison to ensure that promises made to consumers are kept and that advertising of inclusions in rate plans should be clear".
In July 2004 in relation to the handset upgrade offer, Hutchison sent a letter to approximately 10,900 Hutchison customers offering those customers an upgrade to a new LG U8110 mobile telephone. The letter stated in part that customers were able to use their pre-existing $300 handset upgrade credit to "upgrade to the new LG U8110 right now, free of charge – even if you haven’t been with us for 12 months".
The ACCC received complaints from consumers, who had contacted Hutchison to take up the upgrade free of charge offer, but who were in fact required by Hutchison to pay approximately $160 in addition to redeeming the $300 handset upgrade credit.
In the ACCC's view, the representations made by Hutchison that its offer was free when there was a charge associated for customers wishing to avail themselves of the offer may have contravened the Act.
Hutchison has given court-enforceable undertakings that it will:
- not make representations to consumers in the future to the effect that any offer of specific goods and services is "free of charge" when in fact there is a charge for those goods or services unless the term is appropriately specified, and
- offer affected customers, who accepted the LG U8110 upgrade offer and who have not already been offered or received some form of restitution from Hutchison, and who believe they had been misled about the initial offer, a refund equalling an amount which is the difference between the $300 credit and the actual cost of the mobile phone.
"This matter again highlights that businesses need to be careful when they use absolute terms in their advertising", Mr Samuel warned. "An offer of free, complimentary or bonus goods or services means exactly that, and businesses need to exercise caution when making absolute claims of this nature".