Vodafone Australia admits to misleading carrier billing service

After an Australian Competition and Consumer Commission (ACCC) investigation, Vodafone Australia has admitted misleading consumers through its third-party Direct Carrier Billing (DCB) service.

The investigation looked into transactions made between 1 January 2013 to 1 March 2018, though it is most likely Vodafone broke the rules upon the introduction of an Australian Securities and Investments Commission Act in 2015.

“Through this service, thousands of Vodafone customers ended up being charged for content that they did not want or need, and were completely unaware that they had purchased,” said ACCC Chair Rod Sims. “Other companies should note, money made by misleading consumers will need to be repaid.”

The service was first introduced in January 2013 allowing customers to purchase digital content from third party developers such as games, ringtones and apps, with charges being applied to pre-paid and post-paid accounts.

The issue which Vodafone seems to be facing is the service was automatically applied to customer accounts, with purchases being made with one or two clicks. As the customer was not suitably informed, the service has been deemed to be misleading.

Vodafone has already begun the process of contacting impacted customers and will be offering refunds where appropriate. The telco has phased out the majority of the service already, owing to an increasing number of complaints during 2014 and 2015.

While a final judgment has not been released just yet, a confirmation and fine will likely follow in the next couple of weeks, other Australian telcos have been found guilty of the same offence. Both Telstra and Optus have been fined AUS$10 million for their own misleading carrier billing services.

Although it is hardly rare for a telco to be found on the wrong side of right, especially in Australia where the ACCC seems to be incredibly proactive, such instances will create a negative perception at the worst time for the telcos.

In an era when the telcos are searching for additional revenues, carrier billing initiatives are an excellent option. Assuming of course the telcos don’t mess it up.

The digital economy is becoming increasingly embedded in today’s society though there are still many consumers who will begrudgingly hand over credit card details to companies with whom they are not familiar. This mistrust with digital transactions could potentially harm SMEs while providing more profit for the larger players who have established reputations on the web.

In this void of trust and credibility, the telcos have an opportunity to step in and play the intermediately as a trusted organization; how many people have an issue with handing credit card information over to a telco?

There are plenty of examples of this theory in practice; Amazon or eBay are the most obvious and most successful. These are online market places which allow the flow of goods and cash between two parties who may not have had a prior relationship. The consumer might have an issue paying Joe Bloggs Ltd. as there is little credibility, though many trust the likes of Amazon and eBay, allowing the third party to manage the transaction and take a small slice of the pie.

Carrier billing can be an excellent opportunity to add value to a growing digital ecosystem, using the consumer trust in the telcos to drive opportunities for those businesses which want to grow online. However, should there be a perception that the telcos do not act responsibly with a customers’ bill, this opportunity will dry out very quickly.

Aside from costing Vodafone a couple of million dollars, this also dents the credibility of the telco (and overall industry by association). This example suggests it is just as risky purchasing goods through the telco as it is an unknown supplier online.

Samsung dropped in the deep-end for Aussie smartphone lies

The Australian Competition and Consumer Commission has opened up legal proceedings against Samsung suggesting it made false, misleading and deceptive claims over water resistance.

The claim from Samsung is a relatively simple one; S10 devices are IP68 water resistance, meaning the devices are good for up to 1.5 metres for a period of 30 minutes. Advertising for the S10 also depict a number of different scenarios from swimming pools to the beach, suggesting the device performs effectively in different environments.

The ACCC believes Samsung did not test or know of testing to substantiate these claims, and therefore mislead Australian consumers through more than 300 advertisements.

“The ACCC alleges Samsung’s advertisements falsely and misleadingly represented Galaxy phones would be suitable for use in, or for exposure to, all types of water, including in ocean water and swimming pools, and would not be affected by such exposure to water for the life of the phone, when this was not the case,” said ACCC Chair Rod Sims.

“Samsung itself has acknowledged that water resistance is an important factor influencing Australian consumer decisions when they choose what mobile phone to purchase.

“Samsung’s advertisements, we believe, denied consumers an informed choice and gave Samsung an unfair competitive advantage. Samsung showed the Galaxy phones used in situations they shouldn’t be to attract customers.”

Samsung Pool

Interestingly enough, Samsung seems to have dug itself into a whole with this one. Despite suggesting to the consumer on billboards, social media and TV advertising, a statement on its website confirms the images are misleading:

not advised for beach or pool use.

Interestingly enough, phones which had been advertised as water resistant were sold at a higher price. This is all well and good is you fancy taking your phone into the bath but don’t plan on living any form of Australian stereotype; no beaches and no pools for Samsung users.

Unfortunately for those who believe the advertising and don’t have the eagle eyes to spot small print on websites, Samsung also denied warranty claims for phones which were damaged when used in water.

Despite the fact Samsung has clearly misled consumers about the performance of S10 devices in non-fresh water, the firm is standing by its marketing and plans to fight the case. This is a slightly tricky area however, as there is some flexibility build into advertising rules. No-one expects to get a burger which matches the images on McDonald’s adverts, but this exaggeration is accepted.

Samsung might be able to squeeze out of this situation and consumers might continue to be lied to. That said, people should be able to put their phone down for a couple of minutes if they fancy a dip.

Samsung surfboard

Australia poised to significantly increase regulation of OTTs

Australia is the latest country to cast an eye towards Silicon Valley, revamping rules to create a regulatory framework with greater oversight and authority over the booming digital ecosystem.

While the digital economy has operated in a relatively tether-free fashion to date, various scandals throughout the last 18 months have shown these companies are not mature or honest enough to manage themselves. Facebook has drawn the lion’s share of the headlines, but the social media giant is not alone in abusing the system; this is a pandemic with Silicon Valley as ground zero.

“While online services like Facebook, Apple, Amazon, Netflix and Google bring undeniable social and economic benefits to Australians, they have now become global giants with significant market power in Australia,” said Nerida O’Loughlin, Chair of the Australian Communications and Media Authority (ACMA).

“As aggregators, curators and distributors of content – in particular news and journalistic content—digital platforms have significant influence. But they are not fully considered within current media and communications regulation.”

The ACMA statement follows the Digital Platforms Inquiry Preliminary Report from the Australian Competition and Consumer Commission (ACCC) which calls for regulatory reform to tackle newly emerging segments of the digital economy, as well as greater powers to gain insight into how businesses such as Google and Facebook actually work.

This has been the great conundrum of the last few years; these companies have incredible power and influence over society and business, though due to opaque transparency reports and sheer complexity, few understand the cogs of the digital machine. This is not a healthy position; these companies should not be allowed to operate in a cloud of confusion, such is the power they wield. It would be irresponsible of any government to allow such a dangerous status quo to continue.

What this report suggests is the creation of a new set of rules, which would govern the digital economy as what it is. These companies are no-longer simply platforms, and they are not digital publishers. For years, regulators have tried to squeeze them into existing regulatory frameworks and it has not worked. The creation of new rules, fit for purpose to tackle the digital economy and specific to the companies which dominate it, are critical.

As you can probably imagine, the internet giants are not particularly happy with this assault on their freedoms. Facebook has accused the ACCC of protecting traditional media titles at the expense of digital and the consumer, while Google has suggested the ACCC is ill-informed when it comes to basic understanding of the current state-of-affairs.

The aggressive and patronising objections to the ACCC and ACMA should come as little surprise as the internet giants face greater controls on their businesses throughout the world. Australia and Europe seem to be the tip of the spear, but others will soon follow suit once they see how regulations can be effectively reformed. Unfortunately for the internet giants, there is not a single focal point.

In Europe, certain states are putting stricter rules in place for the removal of offensive materials, Germany is leading the charge here. GDPR is a European-wide response to privacy concerns. The tax-avoidance schemes are being tackled by France and the UK. The Netherlands is tabling new rules which would made foreign acquisitions more difficult. The digital business model is being assaulted from numerous angles, and quite rightly so.

Over the last decade, the internet giants have become experts at wriggling through the red-tape maze and exposing the regulatory grey areas. This is only possible because rules have not been designed specifically for the internet economy, an anomaly in today’s world. Every other industry has rules which are designed specifically for those circumstances, and the world is starting to wake up to the need for the same here.

Arguments against might take the form of slowing progress, but the internet giants have not shown themselves responsible enough to self-regulate. Cambridge Analytica, overly-complex T&Cs, data breaches, insecure databases, irresponsible data processing and handling activities, hosting of offensive material and unauthorised location tracking scandals are just a few areas which need to be addressed.

Regulators and legislators need to wake up and start governing the digital economy. Thankfully, Australia and Europe are taking the fight to Silicon Valley.

Nerves jangle as Aussies delay TPG/Vodafone merger decision

The Australian regulator has pushed back the deadline for its decision on whether Vodafone Australia and TPG can move forward with the proposed £8.2 billion merger.

While this far from a definite sign the merger will be blocked by the watchdog, the longer the evaluation process goes on for, the stronger the feelings of apprehension will get. If the Aussies were happy with the plans to create a convergence player, they would have said so, but perhaps the regulator is just making sure it effectively does its due diligence.

The tie up between the pair is supposed to be an effort to capitalise on convergence bounties and reinvigorate the competitive edge of the business. That said, last month the Australian Competition and Consumer Commission (ACCC) weighed into the equation raising concerns a merger would de-incentivise the market to offer low-cost services.

According to Reuters, the ACCC has extended its own self-imposed deadline to evaluate the merger by two weeks to April 11. If the watchdog cannot build a case to deny the merger by that point it probably never will be able to, but you have to wonder whether the additional time is being used to validate its position of opposition.

All regulators are supposed to take a balanced and impartial position when assessing these transactions, though its negative opinion last month suggests the agency is looking for a reason to deny as opposed to evaluating what information is on the table. Giving itself an extra couple of weeks will only compound this theory in the mind of sceptics.

To be even handed though, the consolidation argument is perfectly logical and completely absurd depending on who you are. There are benefits and negatives on both sides of the equation, irrelevant as to how passionately supporters and detractors preach to you. For all the arguments and evidence which are presented, a bucket-full of salt will probably be required.