Court orders Excite Mobile to pay $455,000 for engaging in misleading and unconscionable conduct

The Federal Court has today ordered that Excite Mobile Pty Ltd pay penalties totaling $455,000 for engaging in false, misleading and unconscionable conduct, and using undue coercion in relation to the selling and obtaining payment for mobile phone services.

The Court also ordered that Excite Mobile’s directors, Mr Obie Brown and Mr David Samuel, pay penalties of $55,000 and $45,000 respectively for their involvement in the conduct. The court also disqualified Mr Brown from managing a corporation for a period of three and Mr Samuel for a period of two and a half years. An employee who was involved in the conduct, Ms Fiona Smart, was also ordered to pay a penalty of $3,500.

Injunctions have also been imposed on each of Mr Brown, Mr Samuel and Ms Smart, restraining them engaging, either directly or indirectly, in similar conduct for a period of seven years. Mr Brown, Mr Samuel and Ms Smart have also been ordered to pay the ACCC’s costs.

ACCC Chairman Rod Sims said “This penalty against Excite Mobile serves as a warning to businesses, particularly small businesses, of the consequences for engaging in false, misleading and unconscionable telemarketing practices, and using undue coercion in relation to debt collection.”

“The penalties imposed on Excite Mobile’s directors, together with the disqualification orders imposed by the Court, signal that individual company directors will also personally be held to account when they are involved in sales and debt collection practices by the company that contravene consumer protection laws.”

In handing down his orders, Justice Mansfield stated that:

  • The conduct engaged in was egregious, systematic and deliberate, noting that “the design of the ‘day cap’ was destined to expose its customers to quite substantial monthly charges, but was presented in such a way that effectively concealed that reality” and “directly caused significance loss to individual consumers.”
  • The coercion conduct was the “worst feature” of the debt collection conduct, causing “customers to suffer financial loss and damage…” as well as “non-financial harm such as the stress caused by threats and intimidation.”

Excite Mobile supplied mobile telecommunications services between October 2008 until around the middle of 2011. On 18 April 2013 the Federal Court found that the company engaged in false and misleading and unconscionable conduct in its provision of mobile phone services to customers across Australia. The Court also found Excite Mobile acted unconscionably and used undue coercion when attempting to obtain payment for mobile phone services.

The matter came to the ACCC’s attention via ICAN, the Indigenous Consumer Assistance Network. Further assistance was provided by CAALAS, the Central Australian Aboriginal Legal Aid Service.

*On 1 January 2011 the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010.