CallPlus customers cancelling early their fixed term contracts are entitled to refunds for termination fees charged if they were not told the dollar amount when they signed up.
Now consolidated into Vocus Group, CallPlus came under Commerce Commission scrutiny for its direct selling of broadband and electricity services, cold-calling potential customers. On offer were 12 month or 24 month fixed term contracts. Potential customers were told a fee ‘may be charged’ for any early termination. The amount to be paid was not specified. On early termination, customers were charged between $149 and $250.
CallPlus said fixed term contracts allowed it to offer contracts at a cheaper rate with the early termination fee being compensation if a customer cancelled early. Commerce Commission said the potential fee is part of the ‘price’ and should be disclosed.
Justice Lang ruled CallPlus was in breach of the Fair Trading Act. An early termination fee formed part of the total price due, even though this fee might never be charged. Being aware of the amount that might be charged for early cancellation enabled customers to make an informed choice when entering into unsolicited direct sale agreements.
The court was told CallPlus and the Commission had already negotiated levels of compensation payable should CallPlus lose in the High Court.
Commerce Commission v. CallPlus Services Ltd – High Court (29.11.22)
23.007