In a settlement with the Commerce Commission, Telecom New Zealand Limited has admitted that in 1998 a number of its cellphone advertisements breached the Fair Trading Act.

Commission Deputy Chairman Mark Berry said that the problems with the "StarTac 3000", "Take 'em Both" and "Mobile Madness" advertisements were that small print was used to try to qualify the offer contained in the advertising and the small print was not sufficiently noticeable.

"Small print is a recurring problem in advertising," Mr Berry said. "Small print cannot be used to change the overall impression and all significant terms and conditions must be clearly and accurately disclosed."

In this case the conditions that were not adequately disclosed included additional monthly fees, a two-year minimum connection period, early termination fees, various call plans not being included in the offer and additional special conditions for corporate customers.

The Commission accepts that Telecom has a compliance procedure, but believes that on these occasions the procedure proved inadequate.

Since the Commission first raised the matter, Telecom has been fully co-operative. It has reviewed its advertising and briefed its marketing staff and advertising agency about the issues raised by the Commission. It has also agreed to become part of the Commission's major trader programme and is upgrading its compliance procedure.

Telecom has signed a Deed of Settlement, including an admission that it breached the Fair Trading Act and undertakings to:

  • in all advertising, include clear and easily readable reference to the existence and nature of conditions;
  • enhance its compliance programmes;
  • become part of the Commission's major trader programme; and
  • acknowledge that if the Deed is breached, then the Commission can take court action.

Background

The Fair Trading Act prohibits misleading conduct in relation to goods and services (sections 10 and 11), and false or misleading representations about any conditions (section 13(1)).

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz