Trustpower fined $390K over misleading broadband offer

UPDATE / Sept 19: Trustpower has been fined $390,000 in the Auckland District Court after pleading guilty to misleading consumers over the price and terms of its bundled electricity and unlimited data broadband offer.

Action was brought by the Commerce Commission under the Fair Trading Act.

Asked if the ComCom considered compensation for Trustpower customers, spokesman Christian Bonnevie told NBR, "No, our case centred on the marketing campaign and the advantage it gave Trustpower in the market. We didn’t receive complaints from consumers that they had been personally misled when signing up to a contract, but if anyone was they should raise it with Trustpower in the first instance."

EARLIER: ComCom files charges against Trustpower for misleading broadband offer

Aug 19: The Commerce Commission says it has filed charges in the Auckland District Court against Trustpower over its marketing and sale of its bundled electricity and unlimited data broadband offer.

The seven charges laid under the Fair Trading Act (FTA) relate to Trustpower’s television, online and billboard advertising between March and July 2015 promoting a $49 a month for 12 months unlimited data broadband plan, under the campaign theme: “Good things happen when power and broadband get together.”

In fact, the $49 price was available only to customers who signed up for power and broadband at the same address on a 24-month contract term. For the second 12 months the cost of broadband would be up to $79 a month and if a customer wished to cancel the contract at any time during the 24 month period they would incur exit fees.  The second year price was only disclosed in smaller print ‘terms and conditions’ at the foot of the advertising.

Trustpower has co-operated with the commission’s investigation and has indicated that it intends to plead guilty to the charges, the watchdog says.

A company can be fined up to $600,000 under the FTA.

It was not immediately clear if a competitor laid a complaint, but after a July 27 tweet highlighting the TrustPower offer, Spark chief executive of home, mobile and business Jason Paris replied: "hugely misleading & danger is that if allowed to continue the industry will be forced to follow with the loser being customers." (See tweets below; NBR notes Spark is no babe in the woods when it comes to sneaky ads.). 

Although controversial, the broadband bundle helped TrustPower add more customers last year than any other power company, according to Electricity Authority figures. 

Spark has hit back with its own power-broadband bundle, in partnership with Genesis Energy. Corporate communications director Richard Llewellyn calls it a  "targeted marketing response to Trustpower’s bundling activities in some areas of New Zealand."

In a separate statement, the power company said its plea was to expedite matters, and that it acted quickly to change its promotion when the commission raised its concerns.

"Trustpower is disappointed at the NZCC's (New Zealand Commerce Commission) decision to file charges, as the advertising was subject to external review and advice and Trustpower believed it was appropriate, but it acknowledges NZCC's views," it said.

The Tauranga-based power company provides phone and broadband services to 66,000 customers, almost a quarter of its electricity connections.

Trustpower shares last traded at $8, having increased 2.6% so far this year. 

"Put the second-year price in grey and, oh, stuff it - let's just not even put any number for the exit fee" pic.twitter.com/K4LDG3CgJF

– Chris Keall (@ChrisKeall) July 27, 2016

@ChrisKeall hugely misleading & danger is that if allowed to continue the industry will be forced to follow with the loser being customers

– Jason Paris (@JasonCParis) July 28, 2016

UPDATE: The ComCom says the charges relate to Trustpower's original power/broadband campaign, featuring a couple (pictured), not the ads featuring a canine couple that are currently running.