Optus cops $6.7m fine over dodgy broadband ads

Optus deliberately misled customers with some of its broadband advertising, Australia's consumer watchdog found. Photo / Thinkstock

Optus "deserved" a $5 million fine for misleading its customers with dodgy ads and the landmark decision puts the entire industry on notice, the head of the consumer watchdog says.

The telco was slapped with a $5.26 million (NZ$6.79m)fine in the Federal Court yestereday over an advertising campaign launched on Anzac Day last year about its broadband plans.

The Australian Competition and Consumer Commission (ACCC) sued Optus, claiming the ads misled people about the download allowance they received under the "Think Bigger" and "Supersonic" broadband packages.

ACCC chairman Graeme Samuel welcomed the decision, saying the $5.26 million fine was a "very sustainable penalty" but more importantly it sent a strong warning to the entire industry.

"This was a case of tricky advertising, and it deserved the stiffest penalties," Mr Samuel said.

"It is abundantly clear that the ACCC will not tolerate this sort of advertising."

He said the ACCC had already taken internet provider Dodo Australia "to task" over its advertising and had other major outlets in its sights.

The fine was the largest civil penalty handed down since fines were introduced for breaching the Trade Practices Act, now known as the Competition and Consumer Act, last year.

In a judgement published on Thursday, the court ruled the ads "were seen by a large number of people" and "seriously misleading".

"They suggested that a consumer would obtain a broadband usage allowance of 120GB or 150GB (depending on the particular plan) consisting of two usages allowances - one peak, one off-peak," Justice Nye Perram said.

"... this was only true if the consumer was careful to ensure that all of his or her off-peak allowance was exhausted before the peak allowance was fully utilised."

Mr Samuel said the ads were "carefully crafted" and ultimately misleading.

"What is not disclosed is that once you've reached your data limit, the speed is reduced - whether it's in peak or off peak - to 64kbps, which is not even broadband," he said.

Optus said in a statement the telco was "disappointed" as it strived to provide its customers with the best value and services.

"It was never our intention to mislead our customers," it said.

Mr Samuel said the ACCC warned Optus CEO Paul O'Sullivan and other telco heads about a "race to the bottom" occurring in advertising practices during a high-level meeting nearly two years ago.

"That was September 2009 and then following on from that, we have this sort of advertising," he said.

"Given that such a high level meeting was held... you just have to wonder what sort of culture is around that allows these sort of practices to continue to be used."

Optus has previously run afoul of the ACCC, paying more than $178,000 in fines in May this year over "alleged misrepresentations" regarding its "Max Cap" ads for pre-paid mobile phones.

- AAP