Singtel Optus has been found liable for ‘serious’ contraventions of the Trade Practices Act as a result of misleading advertising about its internet plans.
The Federal Court found advertisements for the ‘Think Bigger’ internet plans misleading on the basis that they failed to disclose that the maximum download limit of 150GB could only be reached if the consumer used all of the off-peak allowance before using any of the peak allowance.
Singtel Optus has been restrained from running the advertisements. The matter will be listed soon for a hearing on whether orders should also be made for corrective advertising and pecuniary penalties.
For any business which advertises, the reasoning in this decision provides a timely reminder of the following legal principles:
- where the class of consumers who will see the advertisements is broad, advertisers should be wary of assuming that consumers will have background knowledge of how a product or service operates
- the fact that it is difficult for the advertiser to include explanatory information in an advertisement (for example, where the space in the advertisement makes it practically difficult to do so) is not a sufficient defence to an allegation of misleading or deceptive conduct
- if an advertisement is misleading on its face, it is not to the point that the consumer will have his or her misleading impression corrected at some point before making a purchase
- different advertising mediums will be treated differently by the courts, as consumers will pay a different level of attention to different forms of advertising (this judgment suggests that consumers will pay less attention to a television advertisement than to an internet advertisement, and less attention again to a billboard advertisement)
- the imagery used in an advertisement can convey a message in the same way as the language used in the advertisement, and
- if corrective advertising is sought as a remedy, the party seeking that remedy must move quickly.
Summary of the facts
Singtel Optus is a large telecommunications firm which, amongst other things, provides broadband internet services. In April 2010, Singtel Optus began running advertisements for a family of broadband internet plans know as the ‘Think Bigger’ plans.
The ACCC brought proceedings against Singtel Optus, complaining about certain representations made in certain television, print, online and billboard advertisements for the ‘Think Bigger’ plans.
The court’s reasoning focused on a particular flyer, which was found to be representative of the advertising for these plans. The front of the flyer contained the words ‘Think Bigger’ accompanied by an image of a moose with oversized antlers, and made the prominent claim:
$59.99* = 150GB** Broadband (75GB peak + 75GB off-peak)
The asterisks led to the words ‘See over for terms and conditions’ and ‘Speed limited once peak data exceeded’.
The ACCC complained that the advertisements failed to disclose that:
- internet usage would be limited once the peak usage allowed was exceeded
- speed would drop to 64kbps if the allowance was exceeded, and
- 64kbps is not a broadband speed.
In relation to the first representation, the court agreed with the ACCC that this representation would be conveyed to ordinary reasonable consumers of broadband services. The plain language of the advertisement (as outlined above) was reinforced by the name of the plan ‘Think Bigger’ and the large size of the moose’s antlers. Accordingly, the court held that the consumer would understand from the advertisement that they would be getting 150GB for $59.99.
However, the 150GB limit was a theoretical maximum limit. The only way that a consumer would obtain 150GB was if the consumer first used all of the 75GB off-peak allowance. If the consumer used the 75GB peak allowance first, then the service would be reduced to 64kbps both for the peak usage and the off-peak usage. After the peak allowance was used up, the consumer would not get the benefit of any of the off-peak entitlement to 75GB at broadband speeds. In its reasons, the court noted that it would only be exceptionally gifted individuals who would grasp the full import of those words on first seeing them in the advertisement.
Singtel Optus argued that any misleading impression conveyed by the advertisements would be corrected at the point of sale. The court did not accept this argument, noting that the advertisement may still induce people to begin dealing with Singtel Optus. It is not to the point that those consumers may not ultimately purchase from Singtel Optus.
In relation to the second and third representations (above), the court considered that the relevant consumer class is members of the general public with a need or desire for broadband internet access. The court found that those consumers would understand that broadband plans have usage limits and that there are consequences when those limits are exceeded, such as that the speed of the service will be substantially decreased to a speed which may not be a broadband speed. Further, the advertisement itself flagged in fine print that the speed limit would be reduced once peak data was exceeded. Accordingly, the court held that these two representations were not made out.