Tricky charging trips up Cardcall
Phone card provider Cardcall has been caught out by ACCC for dodgy advertising, pricing and charging practices.
As anyone in the telco industry knows, $100 worth of credit disappears far more quickly if the provider charges connection fees, bills by the minute instead of the second and builds in other costs.
Cardcall’s advertising inferred that customers would get more air time than they really did, by keeping extra charges and unfavorable charging practices a secret.
For their trouble, Cardcall has ended up in the Federal Court, on the receiving end of a package of orders. And ACCC has told the industry – yet again – ‘You’re on notice.’
And after all that, Cardcall’s web site still contains terms that breach the Trade Practices Act !
ACCC’s case
ACCC showed the Court that:
Cardcall engaged in misleading or deceptive conduct in relation to its Talk Tomato, Daybreak, Ozcall and Its Green pre paid phonecards and vouchers by representing that:
- no fees other than the timed call charges would apply (when in fact service fees, connection/disconnection fees and surcharges applied)
- a certain number of minutes was available on the products (when in fact the total number of minutes could, at best, only be achieved through one continuous call and calls were charged in incremental periods, service fees, connection/disconnection fees, and surcharges applied, thereby diminishing the number of minutes available)
- certain rates per minute were available on the products (when those rates did not take into account that calls were charged in incremental periods, service fees, connection/disconnection fees and surcharges applied resulting in a higher call charges).
And the Court’s orders …
The Court:
- made declarations that Cardcall has broken the law
- injuncted it from further such breaches
- ordered it to place a corrective notice in various foreign language newspapers, including Chinese, Philippine, Arabic and Indian, and on its website
- required it to produce a generic consumer guide to fees and charges on pre paid phone products and to change its advertising to clearly and prominently disclose any additional fees and charges
- ordered it to contribute $20,000 to the ACCC’s costs.
And ACCC read the Riot Act … again
ACCC Chairman Samuel said:
This matter together with the ACCC’s recent action against Tel.Pacific emphasises a fundamental flaw in the advertising of telecommunications companies that convey a headline message based on pricing, yet qualify it to an almost opposite effect.
This action is part of the ACCC’s ongoing commitment to stamp out these poor advertising practices and further puts the telecommunications industry on notice to change its practices.
The ACCC will continue to take action against telecommunications companies who hide additional fees and charges in small print.
Companies need to ensure that consumers buying their products are aware of any additional fees and charges that may be associated with the use of the product. These additional fees and charges must be clearly and prominently displayed to draw the consumers attention and not hidden in small print.
Our take on it
One of the commonest push-backs by telco and ISP marketers against regulatory compliance advice is that ‘everyone else is doing it’. We’re sympathetic to that, but it doesn’t change the fact that ACCC is hunting out and bringing down a pack of CSPs for poor advertising practices. Effective marketing often involves being clever, but there’s a line between ‘clever smart’ and ‘clever dodgy’.
PS: Cardcall’s trading terms breach section 53(g) of the Trade Practices Act
For good measure, Cardcall’s trading terms (on its website as ay 30 May 2009) include:
If cardcall breaches any warranty implied by the Trade Practices Act, or any other warranty implied by law which cannot be excluded, cardcall’s liability for any such breach will be limited (at cardcall’s discretion) to:
- In the case of the Services, to supply the Services again, and
- In the case of a malfunctioning cardcall Phonecard replacement with a cardcall Phonecard having a stored value equal to the unused stored value of the malfunctioning cardcall Phonecard.
Now, that’s plain legally wrong. As we’ve explained before, in the case of services that are ordinarily acquired for personal, domestic or household use or consumption, a supplier cannot use a contract to limit its liability for breach of warranties implied by the Trade Practices Act.
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The new component pricing laws introduced, do they apply to phone card providers advertising 1 cent per minute calls and then having fees and charges hidden in fine print. Thus increasing the advertised 1 cent call.