iiNet in trouble for a second time: Coughs up $204,000 over naked internet pricing claims

iiNet has paid penalties of $204,000 after being slapped with two infringement notices by the competition watchdog over advertisements for its Naked Broadband 250GB Plan.

The Australian Competition and Consumer Commission issued the notices on the basis that iiNet’s advertisements contravened the Australian Consumer Law by failing to prominently state the total minimum price of the service.

The ads appeared on a tram and billboard in Melbourne in November 2014 and included the total minimum price but not in a prominent way. 

This is the second time iiNet has run into trouble with the regulator over its Naked Broadband ads as it copped a $102,000 fine back in 2013 for similar advertisements.

“Consumers must be able to understand the true cost of an advertised product so that they can make informed purchasing decisions,” ACCC chairman Rod Sims said in a statement.

“Businesses must ensure that when they advertise part of the price of a good or service, the total minimum price is also prominently displayed.”

Sims said prominence means that the total minimum price can be easily seen and strikes the attention of the consumer.

“In assessing whether the total minimum price is prominent it is important to consider the context in which the advertisement appears – for example, if the advertisement is on a moving vehicle, where consumers may only be able to see the advertisement momentarily.”

The payment of a penalty specified in an infringement notice is not an admission of a contravention of the Australian Consumer Law.

The ACCC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany the ACCC has taken enforcement action on numerous occasions in relation to the obligation under the Australian Consumer Law to prominently state the minimum price for advertised goods and services across many industries, particularly telecommunications advertising.

Most notably, the ACCC pursued TPG all the way to the High Court.

“The action sends a clear message to businesses about the regulator’s expectation of what is required for a minimum cost statement to comply with the Australian Consumer Law, that is, that they must be easily seen, get the attention of consumers and be appropriate to the particular advertising context,” she says.

“Using disclaimers in outdoor advertising or in ads on vehicles is always tricky given the fleeting and moving nature of these mediums and therefore the risk that they won’t be seen and effectively qualify the representations made – care needs to be taken, or even better, avoid in these mediums claims requiring qualification.”

Monks says the penalties in this case are so high because in this case there were two ads and iiNet is a publicly listed company. 

SmartCompany contacted iiNet for comment but did not receive a response prior to publication.