Telcos fined $121,500 for billing customers after contracts finished

Retail telecommunications providers CallPlus Services Limited (trading as Slingshot), Flip Services Limited and Orcon Limited have been fined a total of $121,500 for making false representations in invoices they sent to their customers.

The companies pleaded guilty and were convicted in relation to 13 charges under the Fair Trading Act for conduct that occurred between 2 January 2012 and 1 March 2018.

All three companies’ terms and conditions said charges for customers’ internet and/or landline services would stop 1 month after they gave notice to terminate their contracts. However, the companies issued final invoices to nearly 6,000 customers which included charges for services beyond the 1-month notice period. In doing so, the companies misrepresented their rights to payments because their customers only owed payment for the services provided prior to the agreed termination date. As a result, customers overpaid around $132,000.

In sentencing in the Auckland District Court Judge Glubb said, “It was incumbent upon them to put in checks and balances to ensure no misrepresentations. It was not inadvertent but nor was it deliberate. Rather, it was a failure to implement and then ensure proper processes were operating.” Judge Glubb also said, “This was highly careless”.

Commerce Commission Chair Anna Rawlings says, customers have the right to expect that businesses will invoice them accurately.

“We expect businesses to have the processes in place to ensure that their invoices are accurate and compliant with what they tell their customers and with the Fair Trading Act. In this case, each company failed to take necessary steps to ensure they were. As a result, they misled and overcharged thousands of customers.”

While each company had internal instructions for billing staff to manually adjust invoices, the instructions were applied inconsistently.

“This is the third case we have concluded in the past year relating to telecommunications providers billing customers after their contracts finished. We hope these convictions reiterate to all businesses that it is essential they ensure their billing systems are robust and they are making accurate representations when they invoice their customers,” says Ms Rawlings.

Background

CallPlus Services Limited, Flip Services Limited and Orcon Limited are each subsidiaries of parent company Vocus (New Zealand) Holdings Limited.

Vocus is a major provider of mobile and broadband services to New Zealand consumers and businesses.

Previous Billing Beyond Termination Cases

In March retail telecommunications provider Spark was fined $675,000 after pleading guilty to charges relating to misleading consumers in its customer invoicing and a $100 welcome credit offer to new customers.

In May Vodafone was also fined $350,000 after pleading guilty to charges relating to false representations in invoices it sent to customers.

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