Telco Exetel has agreed to compensate customers affected by a forced change of contract last year, the Australian Competition and Consumer Commission announced.
In the middle of last year, Exetel announced to more than 2,000 home broadband customers on 12-month fixed term plans that they must change to a different plan or terminate their service without penalty.
In a finding that may have ramifications across the telecommunications industry, the ACCC stated the clause that allowed telcos to “vary any part” of its customer agreements “for any reason” is an unfair contract term that was “likely to contravene the Australian Consumer Law”.
Exetel had originally relied on that clause to force the customers off their existing plan. The clause is commonly used by other providers.
“The ACCC considers that contract terms which allow a supplier to unilaterally vary the agreement for any reason are likely to be unfair,” said ACCC acting chair Dr Michael Schaper. “The Australian Consumer Law provides that unfair contract terms in standard form consumer contracts are void.”
In a warning to the wider industry, Dr Schaper said that the ACCC would communicate to other telcos using such clauses to “put them on notice of the ACCC’s concerns and encourage them to review and update their standard agreements”.
In addition, the consumer watchdog stated Exetel’s advertising of its fixed terms was “likely to be misleading” because “it represented that consumers would receive the service for the 12-month fixed term, when this was not necessarily the case”.
Exetel cooperated with the ACCC investigation and agree to remove the clause from its form for standard residential agreement, refund any additional monthly fees incurred for customers that changed plans and refund any activation charge paid by customers that terminated their Exetel service.
Exetel chief Richard Purdy apologised to affected customers.
“We apologise to customers who were impacted by this decision and have already made a number of changes to address this situation, including changes to our terms and conditions. In addition we have contacted customers who were impacted by our actions and have provided them refunds," he said.
“We are pleased to have this matter behind us, it is very much business as usual going forward for Exetel.”
Dr Schaper also reminded telcos that in November the law would also commence protection for small businesses from similarly unfair contract terms.
False or misleading representations in contract terms violating the ACL can attract penalties of up to $1.1 million.