The Australian Competition and Consumer Commission has taken action in the Federal Court against two fully owned subsidiaries of mobile content provider MobileActive, for allegedly misleading customers.
The incident comes after the ACCC has previously targeted mobile providers, with the consumer watchdog having handed out fines and court proceedings against companies found to be misleading customers. Many were found to offer subscription services without proper means of unsubscribing.
In the latest incident, the ACCC has issued proceedings against two companies – 6G and Global One Mobile Entertainment, both divisions of Mobile One, according to the company’s latest financial report. The watchdog alleges that in February 2010, both companies made “false or misleading representations” when advertising on television.
The television advertisements were found to promote subscription services to a number of products including ring tones and entry into a quiz with a prize of $100,000.
The two subsidiaries also allegedly advertised subscription services to mobile phone games, including the popular titles Space Invaders and Doodle Jump – an extremely popular and high-selling iPhone game.
“The ACCC alleges that, in promoting each of these services, 6G or Global One represented that a consumer could buy the service at a one-off cost when in fact the consumer was actually requesting access to a subscription service,” the ACCC said in a statement.
Global One has been targeted before by authorities, specifically by the Australian Communications and Media Authority in June this year. ACMA found the company “failed to clearly and legibly state how to opt-out of receiving marketing in advertising for the services”.
MobileActive was contacted for comment this morning, but no reply was received before publication.
The watchdog is now seeking orders from the court, including the payment of pecuniary penalties, the publication of corrective television advertisements, declarations and the implementation of a trade practices compliance program. It is also seeking costs.
Subscription services have been targeted by the ACCC, with the watchdog claiming that some companies have mislead users as to the true nature of these programs. While many customers believe they can just purchase mobile products and downloads once, some have been found to continually charge customers excessive fees with no method of stopping.
The action comes as MobileActive continues to struggle financially. In the 2010 financial year it lost $1.22 million in revenue to $12.07 million, while net profit after tax also fell from $260,000 to $80,000.
The case will be heard before Justice Bennett in a scheduling conference on December 7.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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