Vodafone fined $960,000 for misleading advertising

The Commerce Commission said it was pleased with the outcome after Vodafone New Zealand was fined $960,000 in the Auckland District Court for misleading advertising under the Fair Trading Act.

The 21 charges related to claims made by Vodafone regarding the extent of the coverage of its wireless broadband network, made in the "broadband everywhere" marketing campaign between October 2006 and April 2008.

They also related to availability of a $10 free airtime credit for customers who bought Vodafone's "Supa-Prepay" pack between May 2007 and September 2008.

They covered Vodafone's claims about the size of its mobile phone or 3G mobile phone network between September 2008 and February 2009.

"These were significant matters and matters that are important to consumers," Commerce Commission competition manager Stuart Wallace, said.

"It is important that telecommunications companies do not mislead consumers and that they get their marketing messages accurate," Wallace told APNZ outside the court.

The company appeared for sentencing before Judge David Harvey after pleading guilty in July to the charges.

The Commission and Vodafone had agreed on a starting point of $1.2m for the fine, and Vodafone was granted a 20 per cent discount for pleading guilty.

Last November, Vodafone NZ, part of the British telecommunications giant, Vodafone Group Plc, was fined $81,900 for misleading customers over its "1 a day" mobile internet plan.

Four months earlier it was fined more than $400,000 for a similar offence.

Today's decision means penalties imposed against Vodafone New Zealand for breaches of the Fair Trading Act will total close to $1.5 million - the highest ever imposed on a single defendant under the Fair Trading Act.

Vodafone's marketing director, Greg Campbell, said the company took the charges and the resulting fine seriously.

"In 2006 and 2008, there was a huge amount happening in the world of technology - the mobile internet was emerging, mobile networks were speeding up and customers were really getting a handle on the benefits of being mobile" he said in a statement.

"In our genuine attempts to communicate these benefits, we accept that we got some things wrong," he said.

Judge Harvey said the commission had suggested that Vodafone had acted with recklessness but he said "gross carelessness" was a more appropriate description.

He said the fact that Vodafone did not do sufficient to address the problem seemed to have "aggravated the circumstances".

Wallace said that, prior to the Commission bringing charges against Vodafone in 2009, the commission had a significant number of public complaints about Vodafone's various mobile phone and mobile broadband advertising campaigns.

Wallace said that when companies prepare their marketing campaigns, they need to make sure that the headline message is not misleading. Under the Fair Trading Act it's the initial impression that's important.

"Fine print qualifiers won't generally save advertising statements that are misleading at first glance," he said.

(Published by NZ Herald - September 10, 2012)