ACCC orders telco to pay customers back for misleading and unfair contract terms

The ACCC has found that a clause in a telco's 12-month fixed term residential broadband plans was unfair, and has ordered the telco to provide compensation to affected customers.

According to the ACCC, in mid-2015 the telco wrote to more than 2,000 residential customers on 12-month fixed term plans, telling them to either change their broadband plan or terminate their service without penalty.  The telco relied on a clause in its standard agreement stating that it could vary any part of that agreement for any reason.

The ACCC considered the clause was an unfair contract term likely to contravene the Australian Consumer Law.  The ACCC also considered the telco's advertising for the fixed term plans was likely to be misleading because it represented that the consumer would receive the service for a 12-month fixed term, when that was not necessarily the case.

As a result, the telco agreed to remove the clause from its standard agreement, refund any additional monthly subscription costs incurred for the remainder of the fixed term by customers who changed to a new plan, and refund any activation charge previously paid by customers who terminated their service rather than change to a new plan.

This is a useful reminder that the ACCC considers that contract terms which allow a supplier to unilaterally vary the agreement for any reason are likely to be unfair. 

It worth noting that from 12 November 2016, the unfair contract laws will also protect small businesses from unfair terms in standard form contracts.

For the media release, click here.

Government announces opening of data retention grants program

Communications minister Mitch Fifield and infrastructure minister Warren Truss have formally opened applications for a portion of $128.4 million allocated to assist the telecommunications industry with the upfront costs of meeting their data retention obligations.  Applications close 23 February 2016.

The Grants Programme Guidelines (Guidelines) provide that applications will be assessed by an independent consultant who will determine individual scores upon which funding allocations will be based.  The first 25 points (Enterprise Scale Criteria) will be awarded to businesses with an annual gross revenue of up to $3 million based on the size of the applicant (with the smallest businesses receiving the most points).  The remaining 75 points (Typical Implementation Impact) will be calculated according to the number and types of services offered by all applications, the number of subscribers, their gross annual revenue for the most recent full financial year and their anticipated data storage required to meet the date retention obligations.

Importantly, the Guidelines note that funding allocations will not be linked to actual cost but to typical implementation cost (see Typical Implementation Impact above), and do not reimburse full costs but are a financial contribution to the typical up-front costs of compliance.

The full process is expected to take three years.  Successful applicants must execute a Funding Agreement, and will be paid half the grant up front, and the other half when their final reporting obligations are met.

The data retention laws, requiring telcos to store the metadata of their Australian customers for a period of two years, came into effect in October last year.

To access the media release, click here.  For more information on the Data Retention Industry Grants Programme, including eligibility requirements, click here.

ACMA issues formal warnings for Do Not Call breaches

In 2015, a number of complaints about telemarketing calls relating to solar products and installation prompted ACMA to run a national information campaign directed at the retail solar industry.  ACMA worked with the Clean Energy Council and contacted more than 4,000 businesses to reiterate their legal obligations and the need to properly supervise any third party call centres.

The ACMA has issued formal warnings to two companies for their roles in making telemarketing calls to numbers on the Do Not Call Register.

Charities, market researchers, educational institutions and registered political parties are the only businesses exempt from the restrictions.  Marketing calls from businesses with which the recipient has an established ongoing relationship are also permitted.

For the media release, click here.