New Zealand Law Society - Spark fined $675,000 for misleading consumers

Spark fined $675,000 for misleading consumers

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Retail telecommunications provider Spark has been fined $675,000 for making false or misleading representations in its customer invoicing, and when making a $100 credit offer to new customers.

The Commerce Commission says Spark pleaded guilty and was convicted in relation to nine charges under the Fair Trading Act for conduct that occurred between 2 June 2014 and 7 December 2017.

Eight of the charges relate to misrepresentations Spark made in customer invoices. Spark’s terms and conditions said charges would stop 30 days after customers gave notice to terminate their contracts. However, final bills sent to nearly 72,000 customers included charges for services beyond the 30 day termination period.

“Customers rely on companies to invoice them accurately. Overcharging even a small amount to individual customers can result in businesses receiving large sums of money that they are not entitled to. In this instance customers overpaid $6.6 million, averaging an overcharge of $90 per person,” says the Commissioner Anna Rawlings.

“Spark failed to take necessary steps to ensure its invoices were accurate. More than 7,000 customers remain out of pocket despite refunds being made to a large number of others who were affected.”

The other charge relates to promotional letters sent to prospective Spark customers, offering a $100 account credit if they joined Spark and subscribed to a particular broadband plan. The letters gave the impression that new customers could sign up online to receive the credit, when they could not. In fact, the credit would only be paid if customers telephoned Spark to sign up for the plan.

“It is vital that businesses clearly disclose the terms of any offers made when marketing their products,” says Ms Rawling.

In sentencing in the Auckland District Court, Judge Russell Collins said in relation to Spark’s misrepresentations in customer invoices, “It is commercial offending, and commercial offending must be met with commercial penalties.”

Judge Collins said he accepted the conduct regarding the $100 credit was, “a material omission, and the offending involved serious misrepresentation.”

In addition to the sentencing, the Commission has issued Spark with a warning relating to its failure to correctly apply a $300 welcome credit to the accounts of eligible customers.