The consumer watchdog, the Australian Competition and Consumer Commission (ACCC), is actively targeting advertising in the telecommunications industry and is cracking down on any misleading media. With the introduction of mobile phone plans offering infinite calls and texts, the telecommunications industry has become a more competitive market than ever before.  

Carriers are constantly looking for ways to market their product or service that will outdo their competitors.  However, aggressive marketers in this industry must take care when promoting their product to potential customers.

Optus recently took their marketing one step too far and was fined a total of $178,000 by the ACCC for misleading consumers in their advertising campaigns during the months of July and August 2010.
The fines related to 27 separate offences which each incurred a fine of $6,600. Optus had advertised a '$49 Max Cap' plan for mobile phone services both in print and online media.  The ACCC found that the advertisement implied that $49 would be the maximum price the consumer would be expected to pay under that particular plan. However, this was not the case, and $49 was actually the minimum amount the consumer would have to pay under the plan.

The ACCC took the view that by the words "Max Cap", the consumer would be lead to believe that the $49 advertised would be the maximum the consumer would pay, when in fact $49 was the minimum and additional charges applied for handset repayments and optional insurance.

Consequently, the ACCC found that Optus had made a false or misleading representation in relation to the price of goods or services in breach of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010).

In addition to the false or misleading representation regarding the maximum price of the cap, the ACCC also found that the advertising campaign implied any type of calls could be made under the plan. Again, this was not the case as there were restrictions on calls under the plan where certain types of calls were excluded.  As the inclusion of these calls would result in the customer paying a higher price than $49, this representation was also found to be false or misleading.

This infringement comes after another misleading advertising campaign by Optus in February 2011 that was investigated by the ACCC. The Federal Court in Melbourne found that the 'unlimited' broadband plans Optus were advertising contained certain limits. Optus were not fined in this case but were ordered to pay their own legal costs.

The fines send a clear message that the ACCC are serious about ensuring the telecommunications industry are advertising their products and services within the boundaries of the consumer protection legislation and not misleading consumers about the true price of goods or services.  

The crackdown on Optus and the emphasis it has put on advertising in the telecommunications industry is just one example of the ACCC exercising its power and informing the industry that it will not tolerate false and misleading representations. This infringement should serve as a warning to the retail industry as a whole about the consequences of making false or misleading representations about products or services in advertising material and trade promotions.

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