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Monday, November 21

Vodafone fined almost $82K for misleading mobile phone $1 a day customers

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.