In the Auckland District Court yesterday, Callplus Services Limited (trading as Slingshot) pleaded guilty to 50 breaches of the Fair Trading Act in relation to the marketing of its telecommunications services, under charges brought by the Commerce Commission.
The company was convicted and fined $250,000 for illegal ‘slamming’ practices. ‘Slamming’ is an illegal industry practice in which a customer’s telecommunications services are changed to another provider without their consent.
Telecom Retail CEO Chris Quin said although the convictions related to 27 customer cases, Telecom had received 679 customer complaints regarding Slingshot between 2008 and 2011. In 2010, Slingshot represented 67 per cent of complaints escalated to Telecom’s investigating team.
According to Telecom, analysis of complaints showed a range of concerning practices, including not giving consent for their services to be transferred to Slingshot, thinking they were talking to a Telecom representative, or being told it was mandatory to change from Telecom to Slingshot.
"Furthermore, we believe that these complaints are likely to represent a small proportion of the total number of affected customers, as others might not have complained because they were unwilling to go through the hassle of transferring their services back to Telecom, or they simply did not understand why they started receiving bills from Slingshot,” Quin commented.
Quin said the Callplus/Slingshot practices had cost Telecom in terms of lost customer revenue, resources spent on investigating the issue, and legal expenses.
“We hope that this court action will be a timely reminder to all telco industry players to act appropriately when marketing services to customers. Our industry might be fiercely competitive, but it’s important that consumers are always properly informed about what they are buying and from which provider.”