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Highlights
- Federal Court finds (TLS) misled nearly 9,000 customers over broadband speeds.
- Customers experienced a significant drop in upload speeds without prior notification.
- The ACCC seeks penalties and consumer redress against (TLS).
(ASX:TLS) has come under legal pressure after the Federal Court ruled that the company made false or misleading claims regarding broadband upload speeds for nearly 9,000 customers. The Australian Competition and Consumer Commission (ACCC) initiated legal action, highlighting that customers of its budget-friendly brand, Belong, were not informed of significant changes in their service.
Between October and November 2020, (TLS) transitioned 8,897 Belong customers from a broadband plan with a 100 Mbps download speed and a 40 Mbps upload speed to a plan that capped upload speeds at 20 Mbps. The transition occurred without prior notification, leaving customers unaware of the downgrade in their internet service.
Federal Court Findings
The Federal Court ruled that (TLS) failed to notify customers about the reduced upload speed, violating consumer protection laws. The misrepresentation impacted two groups of customers:
- 2,785 Belong Customers (May 2017 - September 2018): These customers were explicitly told their broadband plan included a 40 Mbps upload speed, which turned out to be untrue.
- 6,112 Belong Customers (September 2018 - October 2020): While these customers were not directly informed about upload speeds, they had reasonable grounds to believe their plan specifications remained unchanged.
Following the migration, (ASX:TLS) continued charging customers the same price despite providing a downgraded service. The court found that the cost incurred by (ASX:TLS) for the lower-speed service was $7 less per month per customer, yet no price reduction was passed on.
Regulatory Action & Potential Penalties
The ACCC has sought penalties, consumer redress, and legal costs from (ASX:TLS), arguing that customers were denied the opportunity to make an informed choice about their internet service.
Liza Carver, ACCC Commissioner, condemned the actions of (ASX:TLS), emphasizing the importance of transparency in essential services. She stated that misleading consumers while reducing service quality is unacceptable.
The penalty and potential compensation for affected customers will be determined in a future court hearing. This case serves as a reminder of the importance of corporate accountability and the role of regulators in ensuring fair treatment for consumers.
