26 April 2018 - A Day For Ten Million Dollar Penalties - A Snapshot on Telstra & Ford Penalties

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It is important to be clear, accurate and upfront with consumers about potential costs of services for the consumer and also consumer law rights as evidenced by two Federal Court orders on 26 April 2018 each for $10 million penalties for major companies- Telstra and Ford.  Below is a snapshot on the two ten million dollar penalties.

TELSTRA PENALTY: Following action by the ACCC, on 26 April 2018 the Federal Court ordered Telstra to pay $10 million in penalties for incorrect or misleading consumer representations regarding the “Premium Direct Billing” service.  Telstra charged consumers for phone ringtones and digital games that these consumers purchased without knowing.  The “Premium Direct Billing” service was added to consumer accounts as a default service without the consumers properly being informed of this.  If any consumer (including the children using their parent’s service) accessed the “Premium Direct Billing” then that consumer would purchase the additional digital content and be billed by Telstra. 

The Federal Court found Telstra failed to properly inform the consumers and profited from the incorrect statements and misleading conduct.

Telstra estimate at least 100,000 consumers were affected.  So far there have been $5 million of refunds offered by Telstra to affected consumers and anticipate a further few million of refunds yet to come.

Telstra no longer offers the “Premium Direct Billing” service.

If you think you are an affected Telstra consumer, that signed up to “Premium Direct Billing” without your knowledge or consent, contact Telstra on 13 22 00 or email Telstra to request a refund.

https://say.telstra.com.au/customer/general/forms/Email-Complaint

It is clear that the ACCC is looking into third party billing services more generally beyond Telstra.

FORD PENALTY: On 26 April 2018, the Federal Court ordered Ford to pay $10 million in penalties plus costs for their poor response to consumer complaints regarding three Ford vehicles being the Ford Fiesta, Ford Focus and Ford EcoSport, each of which featured problematic “PowerShift” transmission.  Ford breached section 21 of the Australian Consumer Law.

On 27 July 2017 the Australian Competition and Consumer Commission (ACCC) commenced proceedings against Ford Motor Company of Australia Pty Ltd (Ford) in the Federal Court in relation to Ford's response to customer complaints about Fiesta, Focus and EcoSport vehicles fitted with the PowerShift transmission.

Among other things, Ford failed to provide consumers with sufficient correct information about their rights under the Australian Consumer Law including the consumer guarantee provisions.  Furthermore, the processes that Ford put in place to respond to consumer complaints failed to consider individual circumstances (effectively a blanket procedure with little flexibility).  Consumers were misinformed about their consumer rights and felt they were forced to take up time sensitive offers made by Ford Australia on a misinformed basis that a refund or no-cost replacement was not a viable option.  The offers included non-disclosure provisions meaning that the consumers were not able to discuss the actual settlement they reached with Ford.  Consumers purchased new replacement vehicles at additional cost to the consumer and at financial benefit from Ford.

Ford has undertaken to take corrective action including establishing an independent complaints review program and making Field Services Actions for consumer vehicles available to provide information regarding known vehicle issues and manufacturing defect histories performed on those consumer’s vehicles.  Ford will need to adopt and implement an upgraded compliance system following independent third party advice and an upgraded complaints handling system.

If you made a request for refunds or replacement vehicles to Ford between 1 May 2015 and 1 November 2016 for Ford Fiesta, Ford Focus and Ford EcoSport, you may be eligible to register to have your complaint reviewed by registering at:

www.ford.com.au

 

For further information contact:

Alexandra Johnstone
Partner
alexandra@couttslegal.com.au
02 4607 2110