TPG to face court for ‘misleading’ broadband fees

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Bad news for TPG: the Australian Competition and Consumer Commission is taking on the telco for what it calls a “misleading” and “unfair” $20 prepayment charged to TPG broadband customers.

The consumer watchdog has initiated Federal Court proceedings against TPG over the prepayment debacle, in addition to other contract terms that the Commission considers unreasonable. Essentially, the ACCC alleges that TPG’s use of prepayment fees – and the failure of the telco to more openly disclose to customers that these charges aren’t refundable – qualifies as “misleading conduct” that fails to comply with Australian Consumer Law.

What did TPG do?

Currently, TPG charges this $20 prepayment as an upfront fee on ADSL2+ and NBN plans, to be used as credit to cover any non-included costs incurred by customers. Mostly, this includes pay-as-you-go calls to international or non-standard numbers (13/1300 numbers), or even standard local and mobile phone calls made without a TPG voice add-on. The idea is that charges for any extra costs will automatically be debited from this $20 credit, with the prepayment amount to be topped up automatically when it falls to a specified dollar amount.

This sounds reasonable on paper, but look to the fine print and you’ll discover that this original $20 charge is non-refundable. So even if you never use your TPG service for voice calls, you won’t get that $20 credit back when you cancel your plan.

For customers who do use their prepayment credit to make non-included calls, the automatic top-up is also non-refundable, and the ACCC alleges that this feature is currently triggered when a customer’s prepayment balance falls below $10. This means that no matter how you use your TPG plan, you’ll still lose a minimum of $10 to this upfront charge when you decide to cancel your service.

“A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable,” ACCC Deputy Chair Delia Rickard said in a statement.

“It is unacceptable that TPG only disclose this forfeiture in fine print.”

ACCC: TPG could have ‘millions’ in forfeited fees

The ACCC has estimated that TPG may have collected millions in forfeited prepayment fees from customers since the policy was enacted in March of 2013. Not only is the practice unfair, alleges the ACCC, but TPG’s standard contract term requiring customers to forfeit this prepayment could also be in breach of Australian Consumer Law.

It’s unfortunate timing for TPG, which only last month came out on top in the ACCC’s latest quarterly Broadband Speed Report. Despite TPG ranking ahead of Telstra, Optus and iiNet in the consumer-tested speed ranking, customers may be turned off by the telco following today’s filing by the ACCC.

Of course, if you’re unconcerned about potentially losing $10-$20 in fees, TPG does offer a competitive range of broadband plans across multiple speeds.

But if you’re already a TPG broadband customer – and you’ve made the $20 prepayment in question – the ACCC has your back. The Commission intends to seek undisclosed penalties from TPG, and will ask that the company provide compensation to affected customers.

“We have and will continue to take action to hold telcos to account for failing to comply with the Australian Consumer Law,” said Ms. Rickard.

A TPG spokesman told Fairfax Media the business was yet to receive court documents about the proceedings.

“TPG firmly believes that its plan terms and advertising are neither misleading nor unfair and looks forward to dealing with these important issues through the court process,” he said.

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