Australian Competition & Consumer Commission v Cardcall Pty Ltd
[2009] FCA 583
•22 May 2009
FEDERAL COURT OF AUSTRALIA
Australian Competition & Consumer Commission v Cardcall Pty Ltd
[2009] FCA 583AUSTRALIAN COMPETITION & CONSUMER COMMISSION v CARDCALL PTY LTD (ACN 074 079 897)
NSD 314 of 2009
LINDGREN J
22 MAY 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 314 of 2009
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
ApplicantAND: CARDCALL PTY LTD (ACN 074 079 897)
Respondent
JUDGE:
LINDGREN J
DATE OF ORDER:
22 MAY 2009
WHERE MADE:
SYDNEY
BY CONSENT THE COURT DECLARES THAT:
1.The Respondent, in trade or commerce:
(a)engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the Trade Practices Act1974 (Cth) (TPA);
(b)in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of section 53(aa) of the TPA; and
(c)made a false or misleading representation with respect to the price of services, in contravention of section 53(e) of the TPA;
on each occasion it published, or caused to be published on a web page, and published, or caused to be published and distributed or caused to be distributed, advertising material in relation to each of the following products (Products):
(d)the “Talk Tomato” pre-paid phone cards and pre-paid phone vouchers (Talk Tomato Products);
(e)the “Daybreak” pre-paid phone cards and pre-paid phone vouchers (Daybreak Products);
(f)the “OZcall” pre-paid phone cards and pre-paid phone vouchers (OZcall Products);
(g)the “It’s Green” pre-paid phone cards and pre-paid phone vouchers;
which contained any of the statements “NO SERVICE FEE”, “NO CONNECTION FEE”, “HONEST MINUTES” and “24 HOUR FLAT RATES” by thereby representing that no fees other than the timed call charges would apply to the use of the Products (No Fee Representations), without adequately disclosing that in fact service fees, disconnection fees and surcharges applied to the Products.
2. The Respondent, in trade or commerce:
(a)engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the TPA;
(b)in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of section 53(aa) of the TPA;
(c)in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services, represented that the services had performance characteristics or benefits that they did not have, in contravention of section 53(c) of the TPA; and
(d)engaged in conduct that was liable to mislead the public as to the nature, characteristics and suitability for their purpose of services, in contravention of section 55A of the TPA,
on each occasion it published, or caused to be published on a web page, and published, or caused to be published and distributed or caused to be distributed, advertising material in relation to each of the Products which contained statements to the effect that a stipulated number of minutes of calls was available on the Products, by thereby representing that users would be likely to achieve the stipulated call duration for the location and type of connection (landline or mobile) specified (Call Duration Representations), without adequately disclosing that in fact, the stipulated call duration could at best be achieved only if one continuous phone call was made, calls were charged in incremental periods, and service fees, disconnection fees and surcharges applied, thereby diminishing the number of minutes available.
3.The Respondent, in trade or commerce:
(a)engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the TPA;
(b)in connection with the supply or possible supply of services or in connection with the promotion of the supply or use of services, falsely represented that the services were of a particular value, in contravention of section 53(aa) of the TPA;
(c)made a false or misleading representation with respect to the price of services, in contravention of section 53(e) of the TPA; and
(d)engaged in conduct that was liable to mislead the public as to the nature, characteristics and suitability for their purpose of services, in contravention of section 55A of the TPA,
on each occasion it published, or caused to be published and distributed or caused to be distributed advertising material in relation to each of the Talk Tomato Products, Daybreak Products and OZcall Products which contained statements to the effect that calls to certain locations were charged at certain rates per minute on the Talk Tomato Products, Daybreak Products and OZcall Products, by thereby representing that users could use the Talk Tomato Products, Daybreak Products and OZcall Products for the stipulated call cost per minute for the location and type of connection (landline or mobile) specified (Call Cost Representations) without adequately disclosing that in fact, calls were charged in incremental periods, and service fees, disconnection fees and surcharges applied, resulting in a higher call charge than the stipulated call cost per minute being applied.
BY CONSENT THE COURT ORDERS THAT:
4.Pursuant to section 80 of the TPA, the Respondent, whether by itself, its servants or agents or otherwise howsoever in connection with the supply or possible supply of telecommunication services by way of pre-paid phone cards or pre-paid phone vouchers, in trade or commerce, be restrained for a period of two years from the date of this order, from:
(a)representing that no fees other than the timed call charges apply to the use of pre-paid phone cards or pre-paid phone vouchers when such fees are applicable;
(b)representing that a stipulated number of minutes is available for calls using a specified pre-paid phone card or pre-paid phone voucher when that representation is untrue because the stipulated call duration can only be achieved if one continuous phone call is made and it is not possible to make one continuous phone call or one continuous phone call is not likely to be made;
(c)representing that a stipulated number of minutes is available for calls using a pre-paid phone card or a pre-paid phone voucher without prominently disclosing all applicable fees including:
(i)any charging by incremental periods;
(ii)any service fees;
(iii)any disconnection fees;
(iv)that call charges are rounded up; and/or
(v)that surcharges, other fees or higher rates are payable in respect of certain calls;
(d)representing that a pre-paid phone card or a pre-paid voucher can be used for calls at a stipulated call cost per minute for the location and type of connection (landline or mobile) specified without prominently disclosing all applicable fees including:
(i)any charging by incremental periods;
(ii)any service fees;
(iii)any disconnection fees;
(iv)that calls are rounded up; and/or
(v)that surcharges, other fees or higher rates are payable in respect of certain calls.
5.Pursuant to section 80 of the TPA, the Respondent, whether by itself, its servants or agents or otherwise howsoever in connection with the supply or possible supply of telecommunication services by way of pre-paid phone cards or pre-paid phone vouchers, in trade or commerce, for a period of two years from the date of this order be required, when making representations as to features of the telecommunication services available by way of its pre-paid phone cards and pre-paid phone vouchers, the call durations available by way of those cards and vouchers, or the call cost per minute available by way of those cards and vouchers, prominently state the following matters:
(a)all fees applicable to the use of the pre-paid phone card;
(b)the applicable rates and charges including surcharges;
(c)any charging by incremental periods;
(d)any qualifications on the stipulated call duration; and
(e)any qualification on the call cost per minute.
6.Pursuant to section 80 of the TPA, the Respondent, within 45 days of the date of this order, at its own expense, cause any posters and brochures and any of its other promotional material that contain representations with similar purport or effect to the No Fee Representations, the Call Duration Representations and the Call Cost Representations, for the Products and any other pre-paid phone cards and pre-paid vouchers supplied by the Respondent to be removed from display and/or distribution by retailers or any other person.
7.Pursuant to section 80 of the TPA, the Respondent, within 10 business days of the date of this order, at its own expense, cause any webpages and any of its other promotional material available on the website located at (Respondent’s Website) that contain representations with similar purport or effect to the No Fee Representations, the Call Duration Representations and the Call Cost Representations, for the Products and any other pre-paid phone cards and pre-paid vouchers supplied by the Respondent to be removed from display and further publication.
Corrective Advertising
8Pursuant to section 80 or 86C of the TPA, the Respondent, within 21 days of the date of this order, at its own expense, cause to be published a notice in the terms and form set out in Schedule 1 (Notice) including the font size and form specified in the Notice and with the business logo on the top of the Notice as appearing on the Respondent’s letterhead and
(a)cause the Notice to be published on the Respondent’s Website for a period of 90 days such that:
(i)the Notice shall be viewable by clicking a “click-through” icon located on the homepage of the Respondent’s Website which shall be hyperlinked to the webpage in the form of Schedule 4 to these Orders;
(ii)the ‘click-through’ icon shall have a black background and contain the words “Corrective and Educational Notices Ordered by Federal Court of Australia” prominently in white text and the words “click here” or “go”; and
(iii)the Notice shall occupy the entire webpage which is accessed via a “click-through” icon from a webpage in the form of Schedule 4 to these Orders.
Community Service Orders
9.Pursuant to section 86C of the TPA, the Respondent, at its own expense, cause to be published in the following publications a notice in the terms and form set out in Schedule 2(1) (Advertisement) in the font size and form of the most recent of the Respondent’s advertisements in such publications, but in any event no smaller than ¼ page:
(a)El Telegraph;
(b)An Nahar;
(c)Navtarang News;
(d)Hindi Samachaar Patrika;
(e)Aussie Backpacker;
(f)Philippines Times;
(g)Australian Chinese Times
in an edition which is published as soon as practicable after 21 days after the date of this order. In each publication the preamble to the Advertisement is to appear in English and also be translated into the language commonly used by the readers of that publication in the form of the relevant language portion of Schedule 2(2).
10.Pursuant to section 86C of the TPA, the Respondent, within 21 days of the date of this order, at its own expense:
10.1cause to be published a DL sized two sided leaflet in the terms set out at Schedule 2(2), and
10.2fully distribute the DL size leaflet to Retailers no later than 90 days after the date of this order; and
10.3use its best endeavours to cause Retailers to have available for supply to customers a copy of the DL sized leaflet, the DL sized leaflet to be provided by the Respondent to Retailers in quantities equivalent to one quarter of the DL sized advertising brochures provided to each Retailer for its products, during the period of one year from the date of this order.
11.Pursuant to section 86C of the TPA, the Respondent, within 21 days of the date of this order, at its own expense:
11.1cause to be published an A4 sized poster in the terms set out in Schedule 2(3), and
11.2fully distribute the said A4 sized poster to Retailers no later than 90 days after the date of this order; and
11.3use its best endeavours to cause Retailers to display prominently in their retail premises a copy of the A4 sized poster for a period of no less than 90 days.
12.Pursuant to section 86C of the TPA, the Respondent, within 21 days of the date of this order, at its own expense, cause to be published on its website, accessible for 90 days from the date of this order via “click-through” icons from a webpage in the form of Schedule 4 to these Orders, and thereafter accessible until the date which is 1 year from the date of these orders, by clicking a “click-through” icon containing the words “Guide to Fees and Charges on Prepaid Phone card products” located on the homepage of the Respondent’s Website hyperlinked to a webpage in the form of Schedule 2(1), which also contains hyperlinks to notices in the terms and form set out in Schedule 2(1) translated into the following languages:
(a)Arabic;
(b)Hindi;
(c)Filipino;
(d)Chinese; and
(e)Vietnamese.
Other Orders
13The Respondent, within 45 days of the date of this order (Start Date), at its own expense, cause to be printed prominently on each pre-paid phone card which has fees and charges in addition to time call charges, it creates or causes to be created, for a period of one year from the Start Date, the text which is set out at Schedule 3.
14.The Respondent file and serve on the Applicant within 60 days of the date of this order an affidavit of its proper officer verifying that it has carried out its obligations under paragraphs 6 to 13 of this order, and detailing what it has done.
15.An order that the Respondent pay the Applicant’s costs of the proceeding in the amount of $20,000.
THE COURT NOTES THAT:
16.By agreement with the Applicant, the Respondent’s parent company, gotalk Limited has submitted to the Applicant for the Applicant’s consent, a variation under section 87B(2) of the Trade Practices Act to the current section 87B Undertaking applicable to gotalk Limited dated 18 June 2008 pursuant to which:
16.1the period for the compliance program established by that Undertaking will be extended to apply for an additional period of 1 year until 17 June 2012; and
16.2other modifications are proposed to ensure the compliance program described by that Undertaking specifically provides for:
(a)live monitoring incoming calls made to the Respondent’s helpdesk;
(b)legal review of the Respondent’s advertising and promotional material templates;
(c)the undertaking of a further external risk assessment in accordance with paragraph 2 of the compliance program to cover all activities, including advertising and the production of collateral materials;
(d)internal risk assessment and reporting to the Chief Executive Officer of gotalk and the board of gotalk on actions taken on complaints received by the Respondent; and
(e)training for staff of the Respondent involved in the preparation or approval of advertising material for the Respondent’s products designed to ensure they are made specifically aware of the requirements imposed by the Trade Practices Act and these orders on the Respondent.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
SCHEDULE 1
CARDCALL FOUND BY COURT TO HAVE MADE FALSE REPRESENTATIONS REGARDING PRE-PAID PHONE PRODUCTS
HAVE YOU PURCHASED ANY OF CARDCALL’S PRODUCTS?
THE FEDERAL COURT DECLARED THAT CARDCALL ENGAGED IN FALSE MISLEADING AND DECEPTIVE CONDUCT IN RELATION TO THE TALK TOMATO, DAYBREAK, OZCALL AND IT’S GREEN PHONE PRODUCTS BY:
§REPRESENTING THAT NO FEES OTHER THAN TIMED CALL CHARGES WOULD APPLY WHEN IN FACT SERVICE FEES, CONNECTION/DISCONNECTION FEES AND SURCHARGES APPLIED
§REPRESENTING THAT A CERTAIN NUMBER OF MINUTES WAS AVAILABLE ON THE PRODUCTS WHEN IN FACT THE TOTAL NUMBER OF MINUTES COULD, AT BEST, ONLY BE ACHIEVED THROUGH ONE CONTINUOUS CALL AND CALLS WERE CHARGED IN INCREMENTAL PERIODS, AND SERVICE FEES, CONNECTION/DISCONNECTION FEES AND SURCHARGES APPLIED, THEREBY DIMINISHING THE NUMBER OF MINUTES AVAILABLE
§REPRESENTING THAT CERTAIN RATES PER MINUTE WERE AVAILABLE ON THE PRODUCTS WHEN THOSE RATES DID NOT TAKE INTO ACCOUNT THAT CALLS WERE CHARGED IN INCREMENTAL PERIODS, SERVICE FEES, CONNECTION/DISCONNECTION FEES AND SURCHARGES APPLIED, RESULTING IN A HIGHER CALL CHARGE
CONSUMERS ARE URGED TO MAKE SURE THEY ARE AWARE OF ALL APPLICABLE FEES AND CHARGES WHEN BUYING THESE OR ANY OTHER PHONE CARDS
The Australian Competition and Consumer Commission brought the proceedings in the Federal Court of Australia in relation to breaches of sections 52, 53(aa), 53(c), 53(e) and 55A of the Trade Practices Act 1974 which prohibit false, misleading and deceptive conduct.
The Court made orders that restrained Cardcall from engaging in similar conduct for a period of 2 years, required it to publish this notice and to implement a trade practices compliance program and to pay the ACCC’s costs of the proceeding. A copy of the decision and the detailed orders can be found at align="center">SCHEDULE 3
DISCLOSURE ON CALLING CARDS
Timed charges and other fees apply to calls using this card. For further details please call customer service or visit align="center">SCHEDULE 4
LANDING PAGE
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 314 of 2009
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
ApplicantAND: CARDCALL PTY LTD (ACN 074 079 897)
Respondent
JUDGE:
LINDGREN J
DATE:
22 MAY 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 22 May 2009 I made, by consent, the orders that appear at the front of these reasons for judgment. Ordinarily, I would not publish reasons for judgment in the present circumstances. My doing so in this case is not intended to establish a precedent of practice.
The parties went to considerable trouble in preparing a Statement of Agreed Facts pursuant to s 191 of the Evidence Act 1995 (Cth) and in providing an Outline of Joint Submissions.
I will ensure that a copy of the Statement of Agreed Facts and a copy of the Outline of Joint Submissions are placed on the Court file where they will be available to be read.
I accepted the submissions made in the Outline and they are the reasons why I made the orders.
On the hearing I suggested a number of amendments of an editorial kind to the form of orders proposed and these were incorporated into the form of the orders that were made which appear at the front of these reasons.
I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate:
Dated: 2 June 2009
Counsel for the Applicant: Mr D H Godwin Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent Mr R M Smith SC Solicitor for the Respondent: Clayton Utz
Date of Hearing: 22 May 2009 Date of Judgment: 22 May 2009
0
0
0