Telemarketer’s alleged misconduct prompts call for regulatory regime

There have been fresh calls for tighter regulation of the telemarketing industry during an ongoing court case in which a mobile phone company is accused of misleading consumers.

The Australian Competition and Consumer Commission is taking action against EDirect, also known as VIPtel, which was offering phone contracts to people in the Northern Territory.

The Federal Court in Darwin heard yesterday that the company allegedly misled customers by engaging them in complex transactions they did not understand.

Julian Burnside QC, a lawyer for the ACCC, told the court that “customers by and large didn’t have the faintest idea of what was going on” when they agreed to verbal contracts.

Burnside said the telemarketers spoke quickly and with heavy accents, making it difficult to understand them.

The ACCC alleges customers were also denied the right to act as free agents when they allowed their bank accounts to be debited directly.

The ACCC has alleged that EDirect entered into mobile phone contracts with consumers who provided addresses in areas where the company was unable to supply its services due to the lack of network coverage.

By doing so, the ACCC alleges EDirect engaged in misleading and deceptive conduct and misrepresented the performance characteristics, uses or benefits of its mobile telecommunication services.

The company in question has gone into receivership and did not appear in court yesterday.

Justice Reeves, presiding the case, said the most “egregious” aspect of EDirect’s conduct was “in its selling its mobile phones and service plans to people living in remote areas of Australia… when the slightest enquiry on its behalf would have disclosed that those mobile phones could not connect to the Optus GSM”.

“I enquired of the parties whether there was any regulatory regime in place that required telemarketing calls of the kind involved in this case to be recorded, especially where they involve oral contracts,” Justice Reeves said.

“It seems to me that future detection would be increased if there were in place some regulatory regime.”

Last week, electricity retailers expressed dismay over their failed attempt to introduce self-regulatory mechanisms into the industry, claiming new companies will suffer from the lack of guidelines.

The electricity industry put a proposal to the ACCC to set up an independent body to accredit doorknockers, field complaints and administer a code of conduct.

The ACCC issued a draft decision rejecting the proposed code of practice, saying it was “unlikely to produce material benefit for consumers”.

ACCC chairman Graeme Samuel said in a statement that while the regulator supports efforts by the industry to improve outcomes for customers, it believes the proposed code is “unlikely to deliver on this objective”.

The ACCC found the code had a number of flaws, indicating that it fell short of existing legislative requirements and that the sanctions were not a sufficiently strong deterrent.