Commerce Commission punishes Slingshot and Orcon for breaching Fair Trading Act.
A Commerce Commission investigation and subsequent High Court proceedings has resulted in more than 2,600 customers being refunded a total of nearly $480,000 after three companies, part of the Vocus Group, breached the Fair Trading Act.
Commerce Commission Chief Executive, Vanessa Horne, says for six years broadband and power companies CallPlus Services, Orcon and Switch Utilities, trading under the Slingshot and Orcon brands, inadequately disclosed that a fee ranging between $130 to $250 would apply if customers cancelled their fixed-term contracts early.
The companies entered into fixed-term agreements via uninvited direct sales – sales that are made door-to-door or over the phone.
“Under the Fair Trading Act, businesses making uninvited direct sales must clearly disclose the total price to be paid and any other consideration in a written copy of the agreement. The agreement must be provided to customers within five working days of the sale,” Ms Horne says.
“These obligations are in place to ensure consumers receive clear and accurate information about the total cost of their services, so they can make an informed decision about what they are signing up to."
The Commission’s investigation found that the fixed-term contracts included a clause stating if customers cancelled their contracts early, a termination fee ‘may apply’. However, the fee amount was not disclosed.
Following proceedings filed about this matter in 2021, the High Court found that the amount of the early termination fee should have been disclosed under the Fair Trading Act because it falls under the total price payable and other considerations.
“In total, 4,277 customers had early termination fees applied to their accounts, and 2,636 of those customers paid the fees – a total of $473,688 – leaving them out of pocket for payments the companies were not entitled to.” Ms Horne says.
As a result of the High Court’s finding, the companies have now entered into a settlement agreement with the Commission agreeing to refund affected customers the fees they have paid. The companies will provide the Commission with interim and final reports to demonstrate delivery of their refund commitments.
Customers who are entitled to a refund can expect to be contacted within the next six months.
More information including a copy of the High Court judgment and the settlement agreement is available in the case register on the Commission’s website here.
Visit the Commerce Commission to find out more about the Fair Trading Act.
First published on Commerce Commission New Zealand.