ACCC launches legal action against Optus pre-paid phone card company

The Australian Competition and Consumer Commission has launched legal action against pre-paid phone card companies Prepaid Services and Boost Tel for alleged contraventions of the consumer protection provisions of the Trade Practices Act.

Prepaid Services is a wholly-owned subsidiary of Optus Mobile, which is part of Optus Group.

The ACCC, which has launched legal action in the Federal Court in Perth, alleges the two companies engaged in misleading and deceptive conduct and made certain false or misleading representations, including:

• That certain phone cards would provide consumers with a specified amount of call time when that was not the case.
• That no fees other than timed call charges would apply when in fact other fees were charged.
• That a rate-per-minute for calls would apply regardless of the number and length of calls made when in fact that call rate is highly unlikely to be achieved.

The watchdog also claims that Prepaid Services was “knowingly concerned” in the alleged Trade Practices Act contraventions by Boost, as Boost buys telecommunication services through Prepaid Services.

The ACCC wants declarations that Prepaid Services’ and Boost’s conduct contravened the Act, corrective advertising, community service orders and its costs of the proceeding.

An Optus spokesperson says Prepaid Services has been in discussions with the ACCC for some months regarding the allegations and says Prepaid Services had taken “every reasonable step to remove the material of concern”.

OPtus claims the last correspondence to the ACCC was in mid May, which received no response.

“Late last week, the ACCC notified PPS of its intention to commence legal proceedings. Optus is surprised that the ACCC has resorted to litigation given the efforts we have made to come to a resolution. Optus had believed that the dialogue was ongoing, rather than at an end.”

Optus also says it has not been given a clear understanding as to why the proceedings will take place in Perth when PPS, and relevant personnel, are based in Sydney.

The matter has been filed in the Federal Court’s fast track list and is listed for a scheduling conference in Perth on September 14, 2009.