The consumer watchdog has warned internet providers to improve their advertising of “theoretical” download speeds or face legal action.
Australian Competition and Consumer Commission chairman Graeme Samuel has used a speech to the Australian Telecommunications Users Group annual conference to hit out at ISPs and telecommunications firms over their poor disclosure practices.
“The ACCC is drawing a line in the sand – we’re saying to the poor performers, and there are many of them, mend your ways.”
The ACCC has specifically targeted internet service providers that advertise “theoretical” download speeds, saying it has written to several providers warning them to properly disclose accurate network information.
The warning comes just weeks after a report from communications firm Epitiro showed that the speeds offered by internet service providers are much higher than the speeds actually experienced by users.
“The ACCC has long stated that it believes companies should avoid reference to ‘theoretical maximum’ or ‘peak’ speeds when making broadband speed claims,” Samuel said.
“The ACCC strongly encourages broadband providers to ensure that any broadband speed representations made by them are consistent with actual customer experience.”
Samuel said his warning was the result of a barrage of complaints received by the ACCC about mobile phones, line rentals, internet broadband services, local calls and long distance calls.
Samuel claims the telco industry is the basis of 4000 complaints a year, more than any other sector.
“Today, the ACCC is putting the telecommunications industry on notice. Misleading advertising, unfair contracts, inadequate disclosure and subscription scams are all in the ACCC’s sights. Standards must improve or risk increased scrutiny and action.”
The bulk of the complaints have been about mobile phone services, with several customers claiming they have received “premium” services without any agreement. Other complaints include unclear contract information and difficulties with unsubscribing.
Samuel also says the ACCC will continue to monitor closely providers that advertise “unlimited” text message or call services.
The warning comes just a month after it warned telco TPG that its “unlimited cap saver” mobile offering may have breached the trade practices act.
The watchdog also says it will continue to target publishers of youth magazines for running mobile phone ads it knows are “misleading or deceptive”.
Last month the ACCC pursued legal action against two mobile phone services for alleged misleading advertising.
“To avoid misleading consumers, any qualifications to ‘unlimited’ calls or SMS messages must be clearly stated and not so significant that they negate the overall impression of the ad,” Samuel said.
The ACCC has already written to mobile providers to stop any flow of misleading ads, he said.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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