TPG taken to court for unfair and misleading contracts

Australian telephone company, TPG has been taken to the Federal Court over claims its contracts are unfair and misleading.

What happened?

The Australian Competition and Consumer Commission (ACCC) said TPG asked customers to make a $20 ‘prepayment’ on some plans.

This payment was supposed to cover costs that could occur but which aren’t included in those plans, like overseas phone calls.

However, the prepayment was effectively a non-refundable fee with TPG retaining between $10 and $20 of the prepayment when the customer leaves the plan.

Wait – how?

Imagine you’re a customer. You make an international phone call which costs $12. This isn’t included in your plan, so TPG deducts $12 from the $20 prepayment.

However, your prepayment balance has now fallen below $10, so TPG triggers a top-up of the debit to bring the prepayment balance back to $20.

You don’t make any more international phone calls and forfeit the $20 when you cancel your plan.

Alternatively, you may never have made any international phone calls. You forfeit the $20 when you cancel the plan.

You might also have made a call to a 1300 number. These cost $8 and aren’t included in the plan, so TPG deducts those $8 from your $20 prepayment. As the balance hasn’t fallen below $10, the top-up doesn’t occur. But, when you cancel the plan you still lose the $12 left in the prepayment balance.

‘It is unacceptable’

“A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable. It is unacceptable that TPG only disclose this forfeiture in fine print,” ACCC deputy chair Delia Rickard said.

“Since March 2013, the ACCC estimates that TPG is likely to have retained millions of dollars paid by consumers in prepayments that were forfeited,” she continued.

The ACCC is seeking compensation for consumers and penalties for the telco.

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