Telco ruling a brilliant result for ICAN

Court finds Excite Mobile engaged in false and misleading conduct

Legal action taken by the Australian Competition and Consumer Commission has led to the Federal Court ruling that Excite Mobile Pty Ltd has engaged in false and misleading 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. ACCC chairman Rod Sims said, “This is a landmark decision on unconscionable conduct.”

A large number of consumers across all parts of Australia were affected by Excite Mobile’s conduct, including consumers living in indigenous communities on the Cape York Peninsula, remote areas in Queensland and Western Australia, and throughout the Northern Territory.

The Indigenous Consumer Assistance Network (ICAN) provided evidence of the misconduct to the ACCC in early 2010. “Rogue telcos, telemarketers and door-to door salesman have been warned, Indigenous Consumers are no longer easy targets,” said Aaron Davis, ICAN CEO. “There exists a network of money management workers and financial counsellors across regional and remote Australia with direct links to consumer regulatory bodies like the ACCC.”

“This is a great outcome and I would like to thank the ACCC for their continued commitment in addressing Indigenous consumer issues in some of Australia’s most vulnerable and disadvantaged communities”, said Mr. Davis.

The court found that Excite Mobile’s, Mr Brown and Mr Samuel created a fictional complaints handling organisation called “Telecommunications Industry Complaints” which deceived consumers into believing that complaints about Excite Mobile were being handled by an independent organization. Excite Mobile also sent letters to at least 1074 of its customers, falsely representing that they were from an independent debt collector and that the debt had been referred for collection, when in fact there was no such independent debt collector and the letters were sent by Excite Mobile.

“The conduct of Excite Mobile was outrageous. Inventing a fictitious complaints handling body to deceive customers and creating a fictitious debt collector to coerce the customer to pay an alleged debt to Excite Mobile is unjustifiable and unacceptable,” Mr Sims said. “It also confirms the ACCC belief that the telecommunications sector must improve their standards in relation to the proper disclosure and clarity of key terms and conditions to consumers.”

The ACCC will now seek declarations that Excite Mobile contravened the Trade Practices Act 1974* and that its directors Mr Brown and Mr Samuel and its employee/agent Ms Smart were knowingly concerned in this conduct. Excite Mobile face fines of up to $1.1M for each breach of the trades legislation. The company is no longer trading and its website has been taken down.