Vodafone dodges damage with sorry - brand expert

The latest fine brings Vodafone's total for Fair Trading Act breaches to almost $1.5 million, the highest imposed on a single defendant. Photo / Christine Cornege

Telco avoids major damage to its reputation by owning up to the wrongdoing, says brand expert.

Vodafone has been slapped with more fines for Fair Trading Act breaches than any other company but a brand specialist says the telco has dodged major reputation damage by owning up to the wrongdoing.

The phone and internet company was fined $960,000 yesterday after pleading guilty to 21 charges for misleading advertising.

This brought the total fines Vodafone has copped for Fair Trading Act breaches to almost $1.5 million, the highest imposed on a single defendant.

Despite this milestone, Interbrand managing director James Bickford said Vodafone's apology for its actions would mitigate the harm the offending could have done to its brand.

"They've come out and said 'we've made an error' and apologised for it," Bickford said.

"As far as the brand is concerned, that's what it should be doing," he said.

"That's what 21st century consumers want - they accept people will make mistakes but they don't want cover-ups and denials.

"They just want the brand to say 'okay, we made some mistakes, we've accepted them and we'll put it right and move on'."

Vodafone marketing director Greg Campbell said the company took the charges and the resulting fine seriously.

"In 2006 and 2008, there was a huge amount happening in the world of technology - the mobile internet was emerging, mobile networks were speeding up and customers were really getting a handle on the benefits of being mobile" Campbell said. "In our genuine attempts to communicate these benefits, we accept that we got some things wrong."

The Commerce Commission, which brought the case against Vodafone, said companies needed to make sure their headline message is not misleading when they prepare their marketing campaigns.

Under the Fair Trading Act it is the initial impression that is important, said commission competition manager Stuart Wallace.

"Fine print qualifiers won't generally save advertising statements that are misleading at first glance," he said.

Vodafone was fined yesterday for claims it made on the coverage of its wireless broadband network in a marketing campaign between October 2006 and April 2008.

The charges also related to availability of a $10 free airtime credit for customers who bought Vodafone's "Supa-Prepay" pack between May 2007 and September 2008.

They also covered Vodafone's claims about the size of its mobile phone or 3G mobile network between September 2008 and February 2009.

The company appeared for sentencing in the Auckland District Court before Judge David Harvey yesterday after pleading guilty to the charges in July.

The commission and Vodafone had agreed on a starting point of $1.2 million for the fine, and Vodafone was granted a 20 per cent discount for pleading guilty.

Judge Harvey said the commission had suggested that Vodafone had acted with recklessness but he said "gross carelessness" was a more appropriate description. He said the fact that Vodafone did not do enough to address the problem seemed to have "aggravated the circumstances".

Last November, Vodafone NZ, part of the British telecommunications giant Vodafone Group, was fined $81,900 for misleading customers over its "$1 a day" mobile internet plan.

Four months earlier it was fined over $400,000 for a similar offence.