Determinations

TDR Case Note T003733 (2009)

Issue

Misleading information about the price of overseas broadband roaming services.

Background

The customer subscribed to mobile broadband services from the Scheme Member Provider (Provider). He purchased a broadband data card from the provider’s agent for roaming with a 24-month contract on a 1GB plan. After using the data card on a trip to Fiji he received a bill from the provider for approximately $8,000.

The customer claimed that when he signed up for service, the provider’s agent misled him about the cost. The provider’s agent advised him to sign up to a 2-year contract with a data rate of $49 per GB per month in New Zealand, and that data charges for overseas global roaming were ‘a little more expensive’. In fact, the rate applied to the customer’s overseas data roaming charges of around $8,000 meant that he was being charged $30,000 per GB, about 600 times higher than the local price.

The provider responded that the price for data card usage overseas was not set by its own network but by an agreement among global network providers. The provider’s website included conditions applying to service plans and also a guide to help customers limit data roaming costs. The provider said that the customer did not inquire about the difference in rates between local and overseas data card usage when he spoke with the provider’s store representative and entered into the contract.

Adjudicator’s decision

The adjudicator found that the essential issue was whether there was a misleading representation about overseas broadband roaming charges at the point of sale.

In terms of the Fair Trading Act (FTA), if the provider or its agents breach the FTA by making misleading representations that induce the customer to sign up to the contract, then the contract can be voided and the customer will be excused any liability incurred. The customer’s consistent evidence showed that the provider’s agent advised him about “a little more expensive” or “slightly higher” roaming charges overseas than locally, and the provider did not provide any contrary evidence in the course of the TDR dispute. Those charges were in fact significantly greater than for local usage in New Zealand. The adjudicator found that the customer was misinformed about the cost of the service. The Customer Complaints Code (the Code) also requires that all information provided to a customer must be accurate and up-to-date. The adjudicator found that the provider did not comply with this requirement.

The adjudicator found that there had been a breach of both the FTA and the Code, and that the customer should therefore not be liable for the entire amount of the account raised.

Final outcome

The adjudicator concluded that there had been a breach of the FTA and the Code because the customer had been induced into a contract by misleading representations about the price of broadband roaming services. The customer should therefore not be liable for the entire amount of the account raised. However, the customer acknowledged that he had expected to pay higher charges for overseas broadband roaming, and had made an offer of $1,000 in final settlement of his account. The adjudicator found this to be a fair offer, and confirmed that the customer was liable to pay $1,000 of the account only.