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HOME OFFICE / INDUSTRY

Telco Fined $455K For "Threats" To Consumers

By Oonagh Reidy | Monday | 02/12/2013

Telco and Directors fined almost $0.5 million for threatening and intimidating customers

Federal Court fines Excite Mobile $455,000 for "false"and "misleading" conduct, and using undue coercion when selling and seeking payment for mobile phone services.

On 18 April last, the Court found that the telco engaged in false and misleading conduct in its provision of mobile services to customers across Australia between October 2008 to mid-2011. 

The court action followed an investigation by the Australian Competition and Consumer Commission. The matter came to the ACCC's attention via the Indigenous Consumer Assistance Network. 

In handing down his orders on Friday, Justice Mansfield noted, the telco's conduct was systematic and deliberate, noting "the design of the 'day cap' was destined to expose its customers to quite substantial monthly charges, but was presented in such a way that effectively concealed that reality". 

The coercion was the "worst feature" of the debt collection conduct, causing "customers to suffer financial loss and damage..." as well as "non-financial harm such as the stress caused by threats and intimidation."

Excite Mobile's directors, Obie Brown and David Samuel, were also fined over $100K between them for their involvement in the "unconscionable" conduct. 

The court also disqualified Mr Brown from managing a corporation for a period of three years and Samuel for a period of two and a half years. 

Another Excite Mobile employee, Ms Fiona Smart, was also fined $3,500.

Injunctions have also been imposed on all three, restraining them engaging, either directly or indirectly, in similar conduct for a period of seven years.

All three employees have also been ordered to pay the ACCC's costs.

ACCC Chairman Rod Sims said, "This penalty against Excite Mobile serves as a warning to businesses, particularly small businesses, of the consequences for engaging in false, misleading and unconscionable telemarketing practices, and using undue coercion in relation to debt collection."

"The penalties imposed on Excite Mobile's directors, together with the disqualification orders imposed by the Court, signal that individual company directors will also personally be held to account when they are involved in practices that contravene consumer protection laws."

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