Telecom campaign broke rules on fair trading

Telecom has been found to have breached the Fair Trading Act by not allowing customers a "cooling off" period as required in the Door to Door Sales Act.

The Commerce Commission took Telecom to court over two direct marketing campaigns in 2001 and 2002 for its 027 mobile phone network.

Telecom had employed Appco, Mainly Mobile and Telnet Services to run a door-to-door sales campaign and a telemarketing campaign.

Unsolicited calls were made, either in person or by phone, to customers offering a cellphone with standard two-year contract terms.

If customers passed a credit check the phones were dispatched, but if they decided they did not want the phones they were told the contract would be cancelled only on payment of early disconnection charges.

The commission successfully argued that this breached the act's cooling-off period and that the contracts were therefore invalid.

The High Court agreed Telecom had breached the act by not telling customers they could return the product within a month without penalty.

But it declined to award judgment against Telecom at this stage because orders sought by the commission were "too broad".