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Commission releases unfair telco contract report

11 February 2016

The Commerce Commission has released a report giving the findings of its review of standard form consumer contracts in the telecommunications sector.

The review was completed to assess the sector's compliance with the unfair contract terms provisions of the Fair Trading Act introduced in March 2015.

The unfair contract term provisions are designed to protect consumers from contract terms that create a significant imbalance of rights or obligations between the company and the consumer.
The telecommunications sector review looked at 19 separate standard form contracts from 7 different companies.

"The majority of telco companies had made real efforts to comply with the provisions before they were introduced," Commissioner Anna Rawlings says. 

"However, we did identify 66 terms that we considered potentially unfair. Many of the terms were common across the contracts, particularly those that limited the liability of the company, allowed the company to unilaterally vary the contract or made the customer responsible for unauthorised charges."

In some instances the companies were able to provide information to the Commission to show that the term was necessary to protect the legitimate business interests of the company. In all other cases, the companies accepted the Commission view and have amended or agreed to amend the terms concerned.

All companies have been issued with compliance advice letters from the Commission reminding them of their obligations under the law and cautioning them to ensure their standard form contracts remain compliant with the law.

The Commission says it has also focused on contracts in the electricity retail, credit and gym sectors and expects to report on these industries later in 2016.

Last updated on the 16th September 2019