Spark fined more than half a million dollars for misleading consumers

Section
Business,
Publish Date
Friday, 12 April 2019, 3:37PM

Telecommunications provider Spark has been fined $675,000 for making false and misleading representations in its customer invoices and when making a $100 credit offer to new customers.

Spark pleaded guilty to the consumer law breaches and was convicted of nine charges under the Fair Trading Act for conduct that occurred over the period from June 2014 and December 2017.

Eight of the charges relate to misrepresentations Spark made in invoices, which said its charges would stop 30 days after a customer gave notice to terminate their contracts, however, bills sent to more than 70,000 customers included charges for services after the 30 day termination period.

The other charge relates to promotional letters sent to prospective customers offering a $100 account credit if they joined Spark and unsubcribed to a particular broadband plan. The letter gave the impression new customers could sign up online and get the credit but it only applied to customers who had called to sign up to the plan.

The Commerce Commission found Spark customers had been overpaid a combined $6.6 million - roughly $90 per person.

Commissioner Anna Rawlings said overcharging customers - even small amounts - can result in hefty fines for companies.

"Spark failed to take necessary steps to ensure its invoices were accurate," Rawlings said.

"Customers rely on companies to invoice them accurately. Overcharging even a small amount to individual customers can result in businesses receiving large sums of money that they are not entitled to."

More than 7000 Spark customers still remained out of pocket despite refunds being made by the company, Rawlings said.

In sentencing, Auckland District Court Judge Russell Collins said: "Commercial offending must be met with commercial penalties."

Separately, the commission has issued Spark with a warning relating to its failure to correctly apply a $300 welcome credit to certain accounts.

In a statement, Spark said it sincerely regretted the impact on the customers and had refunded those who were incorrectly billed or did not receive the welcome credit as advertised.

"Spark has fully co-operated with the Commerce Commission during this process, which resulted from mistakes with no malicious intent," a spokesperson said in the statement.

"Spark sincerely regrets the impact on customers and has taken all practicable steps to refund those customers who were billed incorrectly or did not receive their welcome credit."

The company said the Court took into account Spark's conduct during the Commerce Commission investigations, and entering into a guilty plea, into consideration when it determined the financial penalty.

"Spark has fully refunded existing customers and the vast majority of former customers, and has sent a letter or email to the last known address of former customers with a credit balance of $1 or more."

It advised that the fine would not impact Spark's FY19 guidance.

Rawlings said it was vital businesses clearly disclosed the terms of any offers made when marketing their products.

"This is another example of the care businesses must take to ensure their billing and invoicing systems are accurate and that customers are not left out of pocket," she said.

"We encourage all businesses to regularly review their systems and processes to ensure that their products and promotional offers are being delivered to their customers as intended."

 

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