What you need to know
- The Full Federal Court has upheld the first instance decision and dismissed the ACCC's appeal case.
- The Full Federal Court concluded that a term of TPG's customer contract, requiring a prepayment of $20 to cover additional phone charges which would never be refunded in full, was not misleading.
This decision concerned the terms of TPG Internet Pty Ltd's (TPG) mobile, internet and home telephone plans that relates to a 'prepayment' of $20. The Australian Competition and Consumer Commission (ACCC) claimed that the description of the prepayment on TPG's website and brochures was misleading and unfair pursuant to Australian Consumer law, given that the prepayment was forfeited to TPG on cancellation of a plan by the customer. At first instance, the primary judge found in favour of TPG Internet and we reported on that judgment here.
The ACCC appealed the decision on the basis that the primary judge made errors in finding that TPG's description of the prepayment on its website and in brochures was not misleading. The ACCC argued that the word "prepayment" communicated that it was an advance payment which the customer could use before cancelling his/her plan and that if the prepayment was not used, it would be returned to the customer. Secondly, it argued that the references to "prepayment" in the headline sections of the websites and brochures created a false impression. Thirdly, the ACCC argued that it was unlikely a consumer would find, read and absorb the full terms.
On the other hand TPG argued that the use of the word 'prepayment' did not indicate that the full amount or balance could be used or would be refunded if unused to the customer. It also argued that any impression created which suggested that prepayment was to be used in its entirety was "dispelled" if you read the full terms, which were prominently displayed.
The Full Court considered the representations made in the context in which they appear on the TPG website and brochures. The Full Court agreed with the primary judge and TPG, pointing out two fundamental issues with the ACCC's case. Firstly, it assumes that a reasonable and ordinary consumer would not read the full terms and secondly it relies on a "myopic" approach to the meaning of the word "prepayment". The Full Court confirmed that the word 'prepayment' did not mean that the payment will be refunded if left unused. It also reiterated that if a consumer wanted to know what happened to the prepayment, they could simply read the full terms and learn that the prepayment would be forfeited.
As a result, the ACCC did not succeed in its appeal and costs were awarded against it.
Authors: Josephine Gardner, Lawyer; and Anita Cade, Partner.
