10 Sep 2012

Vodafone fined $960,000 for fair trade breaches

10:44 pm on 10 September 2012

Vodafone has been ordered to pay $960,000 after admitting it breached the Fair Trading Act.

It was sentenced in the Auckland District Court on Monday after earlier admitting 21 representative charges brought by the Commerce Commission.

Between 2006 and 2009, the telecommunications company ran two marketing campaigns making false claims - that its mobile broadband service was available everywhere, and that its network was the largest in New Zealand.

Vodafone also ran a promotion offering prepay customers a $10 bonus, but not everyone was able to claim it.

Judge David Harvey said Vodafone was undertaking a massive upgrade of its technology when it ran its campaigns.

"There were going to be the gremlins in the system. The problem was, it seems, that the gremlins either were not expelled quickly enough or consumers weren't told of the problems, or were misled in that regard."

Vodafone's lawyer apologised to the court and to customers, admitting that its promotions could have misled people.

Monday's penalty is in addition to fines of almost $500,000 imposed in 2011 for six other Fair Trading Act charges.

The Commerce Commission says the total penalties are the highest imposed on a single defendant under the Fair Trading Act.

However, watchdog Consumer New Zealand questions whether the fines imposed reflect the seriousness of the company's offending.

David Naulls, editor-in-chief at Consumer magazine, is asking how much money Vodafone made from the five faulty promotions.

"Presumably, Vodafone were making some extra revenue out of running these campaigns, and it's unknown whether the fine equals the gain they got from these misleading claims."