The breach of the Fair Trading Act will result in nearly $480,000 in refunds. Photo: RNZ/123RF
Slingshot and Orcon customers who were left out of pocket after they were charged "inadequately disclosed" termination fees can expect to be contacted about refunds.
The Commerce Commission's investigation and subsequent court proceedings into CallPlus Services, Orcon and Switch Utilities affected more than 2600 customers over six years on fixed-term contracts.
Vocus Group, the Australian utilities company behind the Slingshot and Orcon brands, inadequately disclosed its fees after power and broadband sales that were made door-to-door or over the phone.
The breach of the Fair Trading Act will result in nearly $480,000 in refunds for fees that ranged between $130 and $250.
The commission said any customers entitled to a refund will be contacted within the next six months.
"For six years broadband and power companies CallPlus Services, Orcon and Switch Utilities, trading under the Slingshot and Orcon brands, inadequately disclosed that a fee ranging between $130 to $250 would apply if customers cancelled their fixed-term contracts early," Commerce Commission chief executive Vanessa Horne said.
Under the Fair Trading Act, businesses making uninvited direct sales must clearly disclose the total price to be paid and any other consideration in a written copy of the agreement.
"The agreement must be provided to customers within five working days of the sale," she said.
The commission's investigation found the fixed-term contracts included a clause stating if customers cancelled their contracts early, a termination fee "may apply". However, the fee amount was not disclosed.
Following proceedings filed about this matter in 2021, the High Court found that the amount of the early termination fee should have been disclosed under the Fair Trading Act because it falls under the total price payable and other considerations.
"In total, 4277 customers had early termination fees applied to their accounts, and 2636 of those customers paid the fees - a total of $473,688 - leaving them out of pocket for payments the companies were not entitled to," Horne said.
As a result of the High Court's finding the companies have now entered into a settlement agreement with the commission, agreeing to refund affected customers.
