Vulgarians are consumers too, says Federal Court

In the recent decision of Australian Competition and Consumer Commission v Singtel Optus Pty Ltd [2010] FCA 1177, Justice Perram has held that the advertising and marketing for Optus’ broadband plans known as the “Think Bigger Plans” seriously misrepresented to broadband consumers that they would receive a certain amount of broadband for a specific price when in fact this was far from the case.  The Think Bigger advertisements (flyers, billboards, television commercials and internet promotions) concerned the use of a variety of animals, including a “moose with preternaturally large antlers.  One flyer was depicted as follows:

The ACCC argued that consumers likely would be deceived by the flyer into believing that for $59.99 they would receive 150GB of broadband made up of 75GB of peak usage and 75GB of off-peak usage.  However in practice, if the consumer signed up to the Think Bigger plan if he or she used all of the 75GB peak usage then the broadband service would be throttled back to 64kbps for both peak and off-peak usage.  Not only did this advertisement wrongly suggest that the customer would receive 150GB of usage for $59.99, but it also failed to adequately disclose the fact of the throttled back speed of 64kbps, and that this speed was not actually a broadband speed.

Justice Perram accepted the ACCC’s submissions and rejected Optus’ reliance on evidence that tended to suggest that by the point of sale, the consumer would understand the true intricacies of the Think Bigger plans.  Justice Perram said in a strongly-expressed passage that it was “a mistake to gauge the effect of advertising by what happens merely at the point of sale.  Advertising provokes a whole congeries of effects not the least of which is getting the consumer to think about making a purchase and promoting brand awareness”.  His Honour therefore rejected Optus’ contention, based primarily on survey evidence, that once consumers were drawn into the sale process they would be exposed to information which adequately revealed the actual position.  The fact of consumers being induced by the advertisement was sufficient to establish misleading and deceptive conduct in breach of s 52 of the Trade Practices Act.

At this stage of inducement there was little chance reasonable consumers of broadband (which Justice Perram said included not only sophisticated broadband users but also “vulgarians … less likely to have a detailed knowledge of the intricacies of internet downloading”) would pay attention to the miniscule disclaimer which featured in all the Think Bigger advertisements: “Speed limited once peak data exceeded”.  This was particularly the case with respect to the television commercials the subject of the proceedings, his Honour observing that there was “no hope” of the casual consumer’s attention being drawn to the disclaimer and that “[o]nly by the most astute watching of the advertisement and the frequent use of the pause button was I able to make out [the disclaimer] at all”.

Interestingly, although not required to decide it, Justice Perram rejected the ACCC’s argument pursuant to s 53(aa) of the Trade Practices Act that the Think Bigger advertisements falsely represented that the broadband services offered were of a particular standard, quality, value or grade.  His Honour held that Optus had misrepresented the quantity of broadband provided, not the quality provided.  However, given that the core of the misleading nature of the advertisements was insufficient disclosure the internet speed would be throttled back to 64kbps once peak data was exceeded, that fact would certainly appear to affect the quality of the service offered and provided to Optus’ customers.  Indeed, elsewhere in his judgment his Honour acknowledged the “considerable inconvenience” which confronted broadband consumers once the usage limit was succeeded.

Nevertheless, as a result of Optus’ breach of s 52 of the Trade Practices Act, the Court ordered that Optus be restrained from continuing to represent the Think Bigger advertisements in a manner which failed to adequately disclose that the speed for both peak and off-peak broadband usage would be limited once peak usage was reached.  This was despite Optus’ submission that its advertisements had ceased running, Justice Perram observing “I am far from convinced either that Optus’ recent cessation is anything other than opportunistic or that it signals some newly obtained underlying comprehension of the need to avoid such tricky behaviour in the future”.

One Reply to “Vulgarians are consumers too, says Federal Court”

  1. Lawyer, customer, vulgarian. Whatever the descriptor Federal Court will be praised by customers. Shame the quality of service issue was not dealt with by the Court. In rural areas the ADSL 2 service quality is pathetic compared to what is advertised or metro comparators.

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