Court finds Optus internet ads were misleading

Competition watchdog the ACCC will seek to make Optus run corrective advertisements and pay civil penalties after the Federal Court found the telco ran misleading advertisements for its ‘Think Bigger' broadband plans.

The Australian Competition and Consumer Commission (ACCC) also sought an order for an injunction that prevented Optus from advertising its broadband services in a similar manner for the next five years.

Optus argued any injunction should span only three years. A ruling was expected to be made this afternoon.

The advertisements offered large broadband quotas split into peak and off-peak quotas, accompanied by the words ‘Think Bigger'.

The ACCC argued they were misleading because they did not adequately disclose that if a customer used all of their peak allowance, "the service would be throttled back to 64kbps both for the peak usage and, more importantly, for the off-peak usage", according to a judgment filed late Friday.

"After the peak allowance was depleted, the consumer would not get the benefit of any of the remaining off-peak entitlement... at broadband speeds," the judgment stated.

Justice Nye Perram said that the plans "misrepresented the quantity" of broadband that Optus was offering to provide.

"Customers were not being sold plans which gave them the nominated amount of broadband. They were given plans which had that amount as the maximum usage which could be obtained and, even then, only by careful use," Justice Perram wrote.

"The plans in question did not have the quantity suggested for them. They were not 120GB, 150GB or 170GB plans at all.

"The Commission placed its case on s[ection] 52 [of the Trade Practices Act] and is plainly entitled to succeed under that provision in relation to all of the advertisements on the basis of the failure adequately to disclose that once the peak data quota was reached no further use could be made of the off-peak allowance."

Of the 150GB advertising flyer, Justice Perram said: "Viewed in isolation at the moment of its delivery, this advertisement plainly misleads consumers into thinking that they will receive 150GB of broadband when they are getting no such thing unless they assiduously ensure that they exhaust all of their off-peak usage allowance before exhausting their peak usage allowance."

He also rejected arguments by Optus that the "misleading nature of the advertisement [was] reduced by the statements Optus makes, or seeks to have made on its behalf, at the point of sale."

Optus had argued that advertisements only served to "put customers on inquiry" and that the full details of the plans were disclosed at the point-of-sale.

Justice Perram found in favour of Optus on the issue of the impact of 64 Kbps throttle speeds, believing a reference to it in the footnote was "sufficient".

The ACCC had sought to have the throttle speed labelled as "sub-broadband".

Judgment on the period of the injunction against Optus was due later today. Further directions were set down for Friday.