Commerce Commission warns Spark over notifying customers of broadband price increase

Spark has received a warning letter from the Commerce Commission.
Spark has received a warning letter from the Commerce Commission. Photo credit: File

The Commerce Commission has issued a warning to Spark over its potentially illegally insufficient communication with customers about a broadband price increase.

In August and September 2018 the telecommunications company notified customers using its copper-based broadband service that the price would be going up by $5 a month.

An investigation by the Commission found Spark likely breached the Fair Trading Act by misrepresenting customers' rights in those communications.

Spark's contractual terms and conditions said the company wouldn't change the broadband service's monthly charge for in-contract customers without first obtaining their consent or giving them the option to cancel said contract without termination fees.

But when notifying customers of the price increase, the Commission found Spark did not explain that if customers didn't consent to paying more, they had the right to terminate their contract without facing a penalty.

"In the Commission's view, customers reading Spark's notification of the price rise would have assumed that Spark had a right to increase price without discussing it with the customer and that the customer had no choice but to accept the price increase," Commissioner Anna Rawlings said in a statement.

"In fact, customers who did not agree to the price rise, could terminate the contract without incurring an early termination fee and could take up a more acceptable offer elsewhere if they wanted to."

Rawlings said companies need to "clearly and accurately" represent customers' contractual rights around price increases.

"Businesses must not create the impression that prices can be unilaterally increased if that is not permitted by the contract, or if consumers are not bound to accept the increase."

The Commission has sent Spark a warning letter informing it of its likely law breach to "suggest a change in the recipient's behaviour and to encourage future compliance with the law"

In response, Spark has updated its website information about the price rise and has sent updated information to the affected customers.