ACCC takes action against phone card companies and taxi service

The ACCC’s crackdown on the telecommunications sector has continued, with the Federal Court declaring that a prepaid phone card company owned by Optus engaged in misleading and deceptive conduct.

And in a separate Federal Court case, the ACCC has also launched legal action against Brisbane taxi company Black And White Cabs, alleging the company required its operators to exclusively use the Cabcharge system for processing electronic payments.

The ACCC announced yesterday that it has been successful in its case against Optus subsidiary Prepaid Service Pty Ltd (PPS) and another company that bought services through PPS, Boost Pty Ltd.

The ACCC said the companies’ advertisements had misled consumers by essentially overpromising the amount of talk time a user would get from their prepaid phone card.

Under one example provided by the ACCC, Boost said that its card offered 1,896 minutes of talk time to various countries including the UK and Japan at a flat rate of ½ cent per minute. What it didn’t say was that the 1,896 minutes could only be obtained through what the consumer watchdog called “exceptional and unlikely circumstances, namely through one continuous call in excess of 30 hours or through a series of calls of exactly one or five minutes duration.”

ACCC chairman Graeme Samuel is clearly frustrated with the telecommunications sector and says the case is a “further wake-up call”.

“The ACCC has been active in promoting truth in advertising in the telecommunications industry and this action against Boost and PPS in the phone card sector of the market highlights that the ACCC will take court action where companies make misleading representations.”

ACCC’s latest action against Black and White Cabs involves allegations of a type of anti-competitive behaviour called third line forcing, whereby competition is hurt when a business forces customers to use a specific service or product.

The ACCC says Black and White Cabs, which provides taxi network services to cab operators, required these operators to exclusively use the Cabcharge payments service.

The ACCC wants injunctions against Black and White Cabs, declarations it breached the Trade Practices Act and costs.

But the managing director of the company has accused the ACCC of acting like “bully boys”.

“This is a minor matter which was dealt with back in 2009 and we took corrective action,” he told the Australian Financial Review.

“The ACCC is just carrying on like bully boys. They just seem to want blood for some reason and I think they are trying to use us to get to Cabcharge.”