Economy

Competition watchdog alleges mobile phone quiz offer misleading

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The Australian Competition and Consumer Commission has launched legal action against a company for misleading consumers in ads for its “text and win” mobile phone services.

The Australian Competition and Consumer Commission has launched legal action against a company for misleading consumers in ads for its “text and win” mobile phone services.

TMG Asia Pacific advertised mobile phone quiz products that offers viewers the chance to win a cash prize by texting a response to a phone number operated by the firm.

The ACCC claims the ads, which ran on television, were likely to mislead or deceive viewers because they failed to disclose that:

  • To be eligible for the prize, participants were required to pay a $5 joining fee.
  • Participating in the quiz also resulted in the consumer signing up to a subscription quiz consisting of six SMS messages per month at the cost of $5 each.
  • Prizes could not be awarded to residents of the ACT, Victoria and Queensland even though they would be charged for the service.

The ACCC is seeking orders from the Federal Court include an injunction preventing them from engaging in the conduct again, corrective TV ads and payment of its legal costs.

ACCC chairman Graeme Samuel says mobile premium services similar to those provided by TMG are a common source of complaint to the competition watchdog.

“As many of these services are directed at the younger, less experienced consumer, the ACCC is particularly concerned over what it considers is the failure of certain advertisements to adequately disclose the costs and ongoing nature of the services offered,” Samuel says.

Mobile premium services generally commonly offer free ringtones or games for download or free participation in competitions or quizzes in which prizes can be won.

Samuel says promotions for the products often reel consumers in with an initial free item but fail to disclose that by accepting it they commit themselves to a costly subscription for further downloads.

Disclosure clauses that either fail to provide comprehensive information or that use small text and confusing layout to deter close examination of terms and conditions are also a problem.

“Television advertisements with small print disclosure and busy or distracting images, and magazine advertisements featuring tiny print and confusing clutter, mean that many consumers would not appreciate the significant ongoing costs they could incur by simply texting in to the number on the screen or in print,” Samuel says.

“Many consumers have reported to the ACCC that they were not fully aware of the costs of the services until they received their first bill or found that they had used up all their pre-paid credit,” he says.

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