Optus fined for crooked advertising

BACK in July 2009, Australian Competition & Consumer Commission chairman Graeme Samuel met with the chief executives of Australia's three largest telecommunications companies.

Telstra's David Thodey, Optus boss Paul O'Sullivan and Vodafone Hutchison Australia chief Nigel Dews had met to discuss the soaring number of complaints by consumers over confusing mobile and broadband plans, reported The Australian.

"The message I gave then was that the industry was in a race to the bottom in terms of advertising practices," Mr Samuel said. "That race to the bottom had to stop, advertising standards had to increase . . . (the ACCC) was getting too many complaints."

Mr Samuel said none of the parties was keen for the regulator to litigate on the matter and recalls the group agreeing to enter into a court-enforceable undertaking to lift their advertising standards.

One of the key issues was the use of so-called headline advertising in telecoms, which could go close to misleading behaviour. This was the use of an attention-grabbing major headline, diluted by a fine-print disclaimer.

That issue of headline advertising caught out Optus yesterday, when the Federal Court imposed a hefty $5.26 million fine for a series of broadband advertising campaigns that ran over a period of five months last year.

That Optus could receive the highest civil penalty for a consumer protection breach despite signing that undertaking in September 2009 was the real issue, Mr Samuel said.

Federal Court judge Nye Perram agreed, saying that fact had been considered when assessing the size of the penalty he was willing to impose. "What is involved is hypocrisy: the saying of one thing; the doing of another," Justice Perram wrote in his judgement.

"This has cost Optus lots of money and lots in reputation," Mr Samuel said.

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