The Commerce Commission v Vodafone New Zealand Limited (Auckland District Court, 12 August 2011, Judge Roderick Joyce QC)
Vodafone recently pleaded guilty to breaching the Fair Trading Act 1986 in relation to the pricing of its Vodafone Live! mobile phone internet service and was fined just over $400,000. The charges stemmed from 2007 and 2008 when Vodafone Live! was promoted as "free to browse" for customers, who would only be charged when they left Vodafone Live! and browsed other websites. However, the Vodafone Live! banner was permanently displayed across the top of the screen on many mobile phones, even when the customer had left the free area of the service and was incurring Vodafone's charges for downloading data. Vodafone customers complained to the Commerce Commission about surprise bills running into the thousands of dollars, and the Commission launched a prosecution against what it considered reckless and misleading conduct by Vodafone.
At the time, mobile phone internet browsing was still at the premium end of the mobile services market. This meant that Vodafone needed to fully inform its customers of the charges that were associated with the service and the distinction between what was free to browse and what was not. Despite numerous customer complaints, Vodafone failed to clarify the pricing of Vodafone Live! and was slow to refund overcharged customers, leading Judge Joyce QC to impose a substantial penalty.
Vodafone's conviction highlights the importance of clearly outlining what customers will pay for electronic services, particularly in the area of mobile applications where the line between free content and content that costs is not always clear. Just as importantly, when it becomes clear that customers are receiving unexpected bills, businesses should clarify the charges associated with their products and rectify any difficulties customers have experienced.