Vodafone New Zealand Limited was fined $81,900 in the Auckland District Court today after being found guilty of breaching the Fair Trading Act in relation to its $1 a day mobile phone internet data charges.

 

In sentencing, Judge Kiernan said that although Vodafone's behaviour wasn't reckless, it was at the higher level of carelessness and inadvertence given that they were one of the market leaders in providing mobile phone internet services at the time.

 

Between July and November 2008, Vodafone introduced and promoted a new casual data rate of $1 a day ($1 a day charge) with the maximum allowance of 10MB (megabytes) of data per day, for its mobile phone internet service. The Vodafone website said, "If you use less than $1 worth of data in a day, we'll only charge for what you used."

 

However, Vodafone failed to give customers any information about how the $1 a day charge was calculated. They also failed to inform customers that they would incur the full charge of $1 if they used as little as 204.8KB (approximately 2%) of the 10MB allowance. This lack of information led some customers to form a mistaken belief about how the $1 a day charge was calculated. For example, some customers believed that the charge was proportional to the amount of data that they used below 10MB, meaning that if they used 1MB, they expected to pay 0.10 cents and if they used 5MB, they expected to pay 0.50 cents.

 

"At the time, accessing the internet on your mobile phone was a relatively new service within the telecommunications arena," said Commerce Commission Competition Manager Stuart Wallace. "Even so, providers need to be certain that their marketing and promotions do not mislead consumers, who often have no way of easily verifying the claims being made."

 

"Representations made about price are especially important to consumers."

 

The $1 a day charge was Vodafone's second casual data pricing regime following Vodafone Live! Pre-pay users make up the majority of Vodafone's 2.4 million customers. The $1 a day pricing regime affected both Pre-pay customers and all those customers who did not have an On Account data plan.

 

This was the second of six cases to reach Court that involves the Commerce Commission and Vodafone. Each of the cases relates to alleged misleading mobile broadband or mobile phone promotions by Vodafone between 2006 and 2009. Vodafone pleaded guilty to the first charge, which related to the Vodafone Live! mobile phone internet service, and was fined over $400,000. Vodafone is defending the remaining charges.

 

You can view a copy of the Judge's reserved decision on the Commission's website at: www.comcom.govt.nz/fair-trading-enforcement-outcomes

 

 

Background

The Commission laid charges against Vodafone in September 2009 for alleged breaches of the Fair Trading Act in relation to various broadband and mobile phone promotions.

Vodafone pleaded guilty to the first charge, which related to the Vodafone Live! mobile phone internet service, and was fined over $400,000. For more information, visit:

http://www.comcom.govt.nz/media-releases/detail/2011/vodafone-guilty-of-misleading-vodafone-live-customers-fined-400k/

In addition to the $1 a day issue, the following charges relating to various representations made by Vodafone remain before the Court:

  • the extent of the coverage of Vodafone's 3G mobile broadband service, made in Vodafone's 'broadband everywhere' marketing campaign between October 2006 and April 2008
  • the availability of a $10 free airtime credit for those customers who registered their details on Vodafone's website between May 2007 and September 2008
  • the comparative size of Vodafone's mobile phone network between September 2008 and February 2009
  • the price of a Sony Ericsson W200i mobile phone between July and August 2007.

Fair Trading Act

Businesses found guilty of breaching the Fair Trading Act may be fined up to $200,000 for each charge. Where more than one charge is laid, the court may impose a fine greater than $200,000. Only the courts can decide if a representation has breached the Fair Trading Act.