Australian telco Zen Telecom has been fined $225,000 by the consumer watchdog for signing customers to dodgy phone and internet deals by talking up a non-existent affiliation with Telstra.
Zen - which also trades as XLN Telecom, Venus Telecom, Action Telecom, Alpha Talk and Telko Key – will also pay the court costs of the Australian Competition and Consumer Commission (ACCC) and publish corrective notices on its website and in major newspapers, the Federal Court has ruled.
The ACCC launched proceedings against Zen in March, alleging it had breached consumer law by misleading customers about the nature of its alliance with Australia’s largest telco.
The court ruled that Zen’s cold calling campaign between September 2012 and 2013 tricked customers and signed them up fixed line service agreements that skipped key consumer protections like five-day delivery of a copy of the contract, statutory cooling off periods, disclosure of the provider’s address and methods for cancelling the contract.
The ACCC said Zen didn’t record the first ‘marketing’ stage of the calls, which included the Telstra claims, but did record the agreement made in the latter half of the conversation.
“Zen Telecom breached laws that are specifically designed to protect consumers from unscrupulous sales tactics in unsolicited marketing,” ACCC commissioner Sarah Court said in a statement.
“The ACCC was concerned that by the time consumers progressed to the second stage of the call where they agreed to acquire services from Zen Telecom, they had already been misled by misrepresentations of an association or affiliation with Telstra which had been made during the marketing part of the call."
The Australian Communications Consumer Action Network (ACCAN) said the case highlights a need for Australians to be on the lookout for unscrupulous telco operators, and to sign up to the Do Not Call Register if the want to avoid telemarketing altogether.
“Consumers should be wary of unsolicited telemarketing claims as telemarketers tend to use pressure selling techniques and follow scripts designed to trick consumers into a quick sale,” said CEO Teresa Corbin.
"We advise consumers to ask for a copy of the Critical Information Summary (CIS) and wait until after the telemarketing call to make a decision about signing up to any telco services.”