Tel.Pacific New Zealand Ltd has pleaded guilty to 33 charges of breaching the Fair Trading Act through its marketing of 5 prepaid phone cards from November 2008 to March 2010 and subsequently fined $100,000.
Posters advertising the cards prominently displayed per minute calling rates that users would be charged at, or the number of minutes of calling time available to users. The fine print at the bottom of the posters showed additional costs and surcharges that would apply. In practice, the advertised rates and/or number of minutes of calling time could only be achieved if the card holder made one continuous phone call until all credit was consumed.
The additional costs disclosed in the fine print were found to have been inadequately disclosed in relation to the prominent per minute rates or available number of minutes, and an exchange rate levy was not disclosed at all. For example, some of the calling cards had a 20c daily service fee which applied once the card was first used.
The Commerce Commission considered it relevant that the phone cards were frequently targeted at migrants and international students, groups which, in many cases, were unlikely to speak English as a first language. This increased the likelihood of consumers being misled, because such groups were less likely to closely examine the terms and conditions in the fine print and to understand them, if any consumers read and understood them at all.
In sentencing, Judge Davis in the Auckland District Court, said the way in which the posters were displayed in-store would make it difficult for even a discerning customer to understand that they wouldn't receive the full benefit of the advertised minutes.