Telcos cave in to Commerce Commission

Consumers can be “more confident” about the fairness of contracts with telecommunications companies after certain terms were amended in line with the Commerce Commission’s view.

The commission today released a report on its findings of a review of standard form consumer contracts in the telco sector.

This followed the introduction of unfair contract term provisions to the Fair Trading Act in March last year, which are designed to protect consumers from terms that create a “significant imbalance of rights or obligations” with the company.

Commissioner Anna Rawlings says the telecommunications sector was the first to be reviewed after overseas regulators indicated it was an industry where unfair terms were common.

“In addition, many of the past complaints we had received about unfair contract terms related to telecommunications contracts.”

Seven different companies were reviewed, accounting for 19 separate standard form contracts.

Ms Rawlings says the majority of the companies made “real efforts” to comply with the provisions before being introduced.

“However, we did identify 66 terms that we considered potentially unfair.

“Many of the terms were common across the contracts, particularly those that limited the liability of the company, allowed the company to unilaterally vary the contract or made the customer responsible for unauthorised charges.”

Some terms were, however, able to be shown to protect legitimate business interests of the company.

Otherwise, the companies accepted the view of the commission and have amended or agreed to amend the relevant terms, meaning no court action was necessary.

 “This is a great outcome for New Zealand consumers,” Ms Rawlings says.

"Most New Zealanders have one or more standard form consumer contracts with a telecommunications company and they can now be more confident about the fairness of those contracts."

Reports on the electricity retail, credit and gym sectors are expected to be released later this year. 

Read the review here.

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