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Telco created fake debt collector to make 'outrageous' demands

Rania Spooner (via SMH) | April 23, 2013
An Australian telecommunications company that created a sham independent complaints hotline and sent letters pretending to be a fictitious debt collector has engaged in "false, misleading and unconscionable conduct," the Federal Court of Australia has found.

"I consider the sales method adopted by Excite Mobile for promotion of its day cap plan was in all the circumstances unconscionable," Judge Mansfield said.

"It was not a plan which was suitable for most users of mobile telephones, for obvious reasons.

"One may ask rhetorically whether the consumer would have been interested if they had been told that everyday normal usage of the mobile phone under the plan was likely to increase the monthly charges quite significantly."

Some customers, largely those in remote communities, were also falsely told they could get coverage at their home address, where there was no Optus network coverage available, the court heard.

Judge Mansfield also found a $75 "cool-off" fee and a $195 charge for returning a phone if the box was damaged to be unconscionable or unfair.

ACCC chairman Rod Sims said the judgement was a "landmark" for unconscionable conduct.

"The conduct of Excite Mobile was outrageous," Mr Sims said in a statement on Monday.

"Inventing a fictitious complaints handling body to deceive customers and creating a fictitious debt collector to coerce the customer to pay an alleged debt to Excite Mobile is unjustifiable and unacceptable."

Excite Mobile faces fines of up to $1.1M for each breach of trades legislation, an ACCC spokesman said.

The ACCC are seeking injunctions and pecuniary penalties, which would include orders Mr Brown and Mr Samuel be disqualified from managing a corporation for five years.

Excite Mobile's website appears to have been taken down.

The Australian Securities and Investment Commission has started deregistering Excite Mobile, which operated from 2008 to 2011, but has deferred the process following a request from the ACCC pending the outcome of this proceeding.

 

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