EDirect, trading as VIPtel Mobile, has been fined $2.5 million by the federal court in Darwin for its telemarketers signing up consumers to plans in remote and regional areas which had no network coverage.
Around 350 customers were signed up to deals, which were marketed through the Optus network.
The federal court fined the company for making misleading and deceptive statements to customers about network coverage at their nominated address when no coverage existed.
It is the second offence from the company, with the federal court in Darwin fining VIPtel in 2008 for marketing phone services to customers in areas where they had no network coverage.
The most recent complaint was made by the remote north Queensland indigenous community of Aurukun.
Justice Reeve said the telemarketing activities of the company were “unscrupulous”, with customers being automatically deducted payments from their bank accounts by VIPtel.
“I consider the amount of the total pecuniary penalty to be imposed on EDirect should be at such a level as to make it, to use the descriptor adopted by Logan J, commercial suicide, for any other operators in mobile telephone industry, or elsewhere, to even contemplate taking the risk of engaging in similar conduct,” Justice Reeves said.
“I consider the penalty should act as a general deterrent to companies who use telemarketers in the way that occurred in this case. If such companies, whether mobile telephone companies or others, do not properly supervise and control their telemarketers to ensure that they comply with Australia’s consumer protection laws they can expect to be dealt with severely.”
Rod Sims, chairman of the ACCC, warned telco companies they need to ensure their resellers act lawfully when dealing with consumers.
“I have a message for traders who may think that they can get away with breaches of consumer laws in remote parts of the country. The ACCC conducts outreach and works collaboratively with community groups and state and territory government agencies, with a presence on the ground in the remotest parts of Australia,” he said in a statement.
“Ensuring Indigenous consumers are well placed to exercise their rights is a major priority for the ACCC. We will vigorously investigate breaches and seek large penalties from the court when breaches impacting on Indigenous consumers are detected.”
In 2008, the company signed up more than 150 customers to 24-month plans in areas where they could not receive network coverage. The telemarketing calls originated in India and were made to indigenous consumers whose second language is English, making them an "easy target".
"The misleading conduct was exacerbated when some customers rang to complain and were given no assistance. One customer in a remote Indigenous community was told that he should try standing on his roof to obtain a signal in circumstances where the nearest reception was 230km away,” Sims said.
EDirect, which VIPtel Mobile traded through, is now in liquidation, with the ACCC negotiating $100,000 in customer refunds.
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