Trustpower fined over misleading promotion

  • 22/09/2016

Trustpower has been fined $390,000 after pleading guilty in the Auckland District Court to misleading consumers over a broadband offer.

The Commerce Commission filed seven charges under the Fair Trading Act last month over a promotion the power company ran between March and July 2015, which attracted about 8000 customers to unlimited data broadband plans, the regulator said.

The Trustpower campaign advertised a 12-month unlimited data broadband plan for $49 per month, but that price was only available to customers who signed up for power and broadband at the same address on a 24-month contract term, and the plan would cost up to $79 per month in the second twelve months.

Customers would also have to pay a $195 exit fee if they wanted to cancel the contract in the 24-month period.

Competition general manager Antonia Horrocks said Trustpower's marketing misled consumers by keeping important terms hidden in small print.

"It's vital businesses clearly disclose the price and any key conditions when marketing their products so consumers can properly assess the total cost of the service," Horrocks said.

"An artificially low headline price that is subject to significant limits in the small print, including substantial term and exit fee requirements, is likely to be misleading and in breach of the Fair Trading Act.

"This type of advertising is of particular concern to the Commission as the misleading headline price can attract customers away from traders who advertise their prices clearly and fairly."

Trustpower was last fined for breaching the Fair Trading Act in 2009 when it had to pay $17,000 for misleading its customers about the nature of a power bill review service.

The shares last traded at $7.75, and have fallen 0.6 percent this year.