Zen Telecom faces ACCC court action for allegedly masquerading as Telstra

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Telephone group Zen Telecom is being taken to the Federal Court by the Australian Competition and Consumer Commission for allegedly claiming to be connected to Telstra.

The ACCC alleges that Zen Telecom engaged telemarketing companies to promote its services, which made false and deceptive representations during cold calls to consumers stating they were acting on behalf of Telstra, or a business associated with Telstra.

Zen Telecom is a supplier of telephone, broadband, mobile and mobile broadband services across Australia. It trades under various names including XLN Telecom, Venus Telecom, Action Telecom, Alpha Talk and Telko Key.

The ACCC alleges the company has contravened Australian Consumer Law. ACCC chairman Rod Sims said the ACL’s unsolicited consumer agreements were “specifically designed to protect consumers during unsolicited marketing transactions where they’re not expecting to be contacted and are off guard”.

“Companies are free to market their services, including by telemarketing, so long as they present consumers with accurate information and comply with their obligations under the Australian Consumer Law,” he said.

Other breaches the ACCC alleges Zen Telecom undertook include failing to provide consumers with a copy of their contract within five business days and failing to provide consumers with an agreement that clearly stated Zen Telecom’s address and informed consumers of their cooling off rights.

The ACCC also alleges Zen Telecom failed to provide consumers with a notice to cancel the contract, and supplied services to consumers during the 10 day cooling off period.

Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany the litigation is consistent with the ACCCs recently announced 2014 priorities, which included a focus on telemarketing conduct in the telecommunications industry.

“We have seen conduct where businesses are trying to masquerade as large corporations before and trying to leverage off that good will and reputation, this type of action tries to stop this happening and stop consumers suffering detriment,” Monks says.

She says the lesson for business is not to try to pretend you’re someone you’re not.

“You have to very clearly represent who you are and the business that you are calling on behalf of and ensure you are complying with the Unsolicited Consumer Agreements provisions which include a lot of disclosures up front so consumers have no confusion as to who they are dealing with,” Monks says.

“Businesses should also take care in the names they use. I have seen a lot of Telstars and different variations on large corporate names.”

A directions hearing for the Zen Telecom case is scheduled in Perth for March 28, 2014.

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Cara Waters is the former editor of SmartCompany. Previously, Cara was a senior reporter at the Financial Times website FT Adviser in London and she also worked for The Sunday Times in London.

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