The Commerce Commission says it is still chasing Vodafone over allegedly misleading customers for mobile internet services, after the telecommunications giant was today fined more than $400,000 for misleading advertisements.
Vodafone was sentenced by Judge Roderick Joyce in Auckland District Court on five representative charges it had earlier admitted under the Fair Trading Act of misleading its customers about the true cost of its mobile internet.
The Commerce Commission laid the charges over Vodafone's "$1 a day" mobile internet plan.
It said Vodafone customers thought they were paying $1 a day for 10 megabytes of data but they were actually paying $1 after using only about two percent of the 10MB allocation.
Passing sentence, Judge Joyce said: "Vodafone's shortcomings must, in my view, have had a very real impact on many consumers or customers.
"The money sums in question might have meant nothing to someone of considerable means but pay-as-you-go customers are surely not in that category...in any event, no-one - rich or poor - should ever have to pay what, properly pre-warned, they could avoid paying."
The judge added: "I was not persuaded that to describe the problem as being one of "technical oversight" was duly to recognise the level of mismanagement ... it is extraordinary that a concern like Vodafone fell down in such an elementary way."
He fined Vodafone $402,375 plus costs pointing out that he could have fined the company up to $1 million.
In a statement following today's sentencing, Vodafone said it had taken the charges seriously and refunded affected customers.
"We have put in place measures to make sure that customers are not confused by data charging and we are constantly reviewing and refining these processes," Vodafone said.
The commission said, following the sentencing, that it was the first of six Vodafone cases to reach court after charges were laid in 2009.
Each relate to alleged misleading broadband or mobile phone promotions by Vodafone between 2006 and 2009. Vodafone is defending the charges.
In one case the commission alleges that between May 2007 and July 2008 -- when mobile internet was a premium service -- Vodafone made a number of claims on its website about its mobile internet service Vodafone Live! -- that it was "free to browse" and that customers would be notified before incurring any charges for downloading or purchasing products or services.
However, the commission said that although customers were not charged for accessing and browsing within the confines of the Vodafone Live! service, they were not adequately notified when they left the service and were charged more for downloading and purchasing other products or services.
The "Vodafone Live!" heading was displayed as a banner across the top of the screen on many mobile phones, even when the user had left the service, the commission said.
As a result, customers who thought they were using a free service were instead being charged at the casual data rate of $11.25 per megabyte (MB). At the time, an average song download of 4MB would have cost approximately $45 to download.
Commission competition manager Stuart Wallace said customers suffered significant "bill shock" when they discovered they were being charged the high data costs when they thought they were browsing for free.
One complainant to the commission was charged more than $1300.
Mr Wallace said that while Vodafone had subsequently refunded some affected customers and changed the way it promoted Vodafone Live!, as well as how it charges for data services, it was slow to respond to the problem.
In addition to the Vodafone Live! issue, the charges relate to various representations made by Vodafone regarding:
* The extent of the coverage of Vodafone's 3G mobile broadband service, made in its "broadband everywhere" marketing campaign between October 2006 and April 2008;
* The cost of using Vodafone's $1 per day casual data charge for its mobile internet service between July 2008 and November 2008 (separate from today's case)
* The availability of a $10 free airtime credit for those customers who registered their details on Vodafone's website between May 2007 and September 2008;
* The size of its mobile phone network between September 2008 and February 2009; and
* The price of a Sony Ericsson W200i mobile phone between July and August 2007.
No court dates have yet been set.
Vodafone could not be reached for comment on the remaining charges outlined by the commission.
