ACCC v TPG Internet Pty Ltd [2019] FCA 1677: Court Rules in Favour of TPG

Friday 18 October 2019 @ 11.04 a.m. | Legal Research | Trade & Commerce

In ACCC v TPG Internet Pty Ltd [2019] FCA 1677 (11 October 2019), the Federal Court of Australia (“Federal Court”) has dismissed a case brought by the Australian Competition and Consumer Commission (“ACCC”) against TPG Internet Pty Ltd (“TPG”).

The Federal Court found that representations made by TPG about prepayments customers had to make in its internet, home telephone and mobile plans were not false or misleading, and that a term in its contracts which allowed TPG to keep prepaid funds when customers exited their plans, was not unfair.

As outlined in an ACCC Media Release: 

"From 2013 some of TPG’s personal mobile, home telephone and internet plans required customers to make a “prepayment” of at least $20 to cover potential usage outside what is included in their plans, such as excess data usage and phone calls to “1300” numbers.

When a customer’s prepaid balance falls to below $10, TPG directly debits customers so that the amount will return the prepayment to $20. On cancellation of a customer’s plan, they are unable to use the full amount of the prepayment. As a result, TPG retains at least $10 of the prepayment when a customer cancels their plan."

TPG successfully contested that it had told consumers in its Terms and Conditions that the money would not come back, arguing that the term “prepayment” was not mutually exclusive of ultimate forfeiture, disputing the ACCC’s interpretation.

TPG argued that the $20 non-refundable charge was a legitimate financial impost due to the propensity of some consumers to walk away from smaller debts that were more expensive to collect than write off, with O’Callaghan J commenting at paras [111-112]:

“The extent of the impact of effectively irrecoverable bad debts is considerable ... the total of TPG’s customer unrecovered usage charges for May 2013 to May 2019, for both mobile and fixed line services, greater than the total of the customers’ prepayment balance, was $9.544m … The ACCC submitted that the fact that TPG’s bad debts were not recovered was a product of its own choice, but that is, with respect, an unrealistic response, because even assuming that a judgment debt of (say) $150, which was one example in the evidence, could be recovered in one jurisdiction or another, the associated legal and other costs would make the exercise counter-productive …

O'Callaghan J was not convinced by arguments put forward by the ACCC, noting at para [71]:

“In my view, a reasonable or ordinary prospective purchaser of retail mobile, internet and home telephone services would read, and readily understand, each of those things. In particular, such a consumer would understand that the amount of the prepayment, which is only ever $20 in the ordinary case, over the whole term of the plan, is to be available for Excluded Services … the benefits of that arrangement are available on condition that, if and when the customer cancels the plan, whatever amount of the prepayment that is not used …”

Justice O'Callaghan ordered that the proceedings be dismissed and that the ACCC pay TPG's legal costs.

Comment and Reaction from the ACCC

In the Media Release, ACCC Chair Rod Sims said of the Federal Court's decision:

“We brought this case because we believed TPG misled its prepaid customers about their ability to use up their full prepayment for services outside their plans, and to obtain a refund of any unused funds when they ended their contract.”

Mr Sims said “[we] will continue to take cases against telco businesses that we consider are making misleading claims about their services.” The ACCC is “carefully considering the judgment”.

Comment from TPG

In a statement issued by TPG, a spokesperson said:

"The court has rejected the ACCC allegations that TPG engaged in misleading or deceptive conduct and entered into contracts with consumers containing an unfair term.”

TPG's legal representative said:

"... the company had only ever tried to offer customers a competitively priced product said the company had only ever tried to offer customers a competitively priced product. As part of those efforts, we have always looked for innovative ways to be more efficient … We were disappointed that the ACCC decided to bring these proceedings ... and are pleased to have been vindicated.”

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.

Sources:

Related Articles:

Legislation hotline: 1800 077 088

FREE legislation news, delivered weekly.

Sign up now.

We love legislation. About us.

NEW information resources - great for training.

Access now.

Law One product page. Search national legislation.Point in Time product page. Search legislation by time period.