Misleading adverts land Ihug on the mat

By DITA DE BONI

Internet provider Ihug has been hauled up publicly over ads the Commerce Commission has deemed "liable to mislead the public."

In a settlement disclosed yesterday, Ihug agreed with the commission that some of its advertising was contrary to the Fair Trading Act.

The act prohibits false or misleading claims about the price of goods and services.

The ads in question - featuring the clever ginger cat - promised internet connection "from $34.95 a month," but failed to disclose an additional compulsory joining fee of $39.

That campaign ran for four months last year, followed by a November campaign in the Herald offering a $700 "rebate" if customers brought a Value Plus PC and Ihug internet connection together.

The commission ruled that $700 would not be saved, as the monthly charge for internet access was raised from $10 to $29.95 a month for customers of the combined deal.

According to the commission, the savings amounted to $221.20, not $700.

"The commission does not accept Ihug's argument that because it used the words "rebate" and "subsidy" that it was not claiming that customers would make a saving," said fair trading manager Rachel Leamy.

"In reality, a significant proportion of the rebate was illusory because of the inflated internet service charge."

The commission has also warned Ihug of a complaint about the company's "endless internet at $34.95 a month" promotion, which does not point out that the deal is only valid if a customer signs up for three months.

An Ihug source said the offer omission was "one-off" and a new employee in the advertising department had erred in using the words "rebate" and "subsidy."