Spark warned by Commission, refunds thousands of broadband customers following misleading conduct

Spark New Zealand has been warned by the Commerce Commission and has refunded nearly 113,000 customers after some were charged for a wire maintenance service they did not need (or could not use or benefit from).

The Commission began investigating Spark New Zealand Trading Limited (Spark) in 2020 following a consumer complaint. Spark has provided the Commission with enforceable undertakings in which it committed to refunding all affected customers. Spark has already refunded around $15 million to customers with a remaining $348,757.93 still to be refunded to 4,921 customers.

Between 2014 and early 2021, Spark charged more than 400 wireless broadband customers and around 112,600 fibre connection customers for the wire maintenance service, even though most would have no need for it. Spark collected around $15.7 million in fees for the service from those customers over the six-year period.

Commission Chair, Anna Rawlings, says Spark’s conduct, which likely breached the Fair Trading Act, created an impression through its website that a wire maintenance service was suitable for all connection types when it was not, and made misleading representations through invoicing its customers for the service that would be of no use or benefit. This highlights the need for businesses to have the right systems and processes in place, so customers are charged only for the services they need, can use, or benefit from.

“Customers must be able to rely on information businesses provide to them when they are buying, contracting or being invoiced for services,” says Ms Rawlings.

“Businesses should not be charging customers for services that they don’t need or have no use for, or services that they cannot practically benefit from. If extra services or costs are charged, businesses must ensure that information about them is clearly disclosed to customers and is accurate, complete and easy to understand.”

Spark has since stopped selling the service to wireless and fibre connection customers. It is in the process of voluntarily refunding all wire maintenance service fees paid by customers with wireless and fibre broadband connections and is putting system fixes and processes in place to prevent the wire maintenance service being offered to these customers in the future.

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