Telecom New Zealand Offers Compensation Over Billing Fault

New Zealand's Commerce Commission says that it has reached a settlement with Telecom Mobile after a billing fault on the 027 network resulted in thousands of customers being charged peak rates for off-peak calls.

Telecom Mobile admitted breaching the Fair Trading Act and agreed to credit approximately 11,000 affected customers a total of NZ$54,000 (US$37,600). This represents NZ$27,000 for the costs of the affected calls, and a further credit of the same amount to compensate customers.

The Commission investigated after a complaint in 2001 that an off-peak call made between 7pm and 7am, which should have been free on that customer's call plan, had been billed by Telecom Mobile at peak rates.

Telecom Mobile admitted that a fault in its billing system between 1 July 2001 and 28 February 2002 meant that 027 network customers who made off-peak calls could have been charged at peak rates. The fault meant the time shown on customers' phones, which is set by Telecom, was not synchronised with the time recorded by the billing system. Calls made just after 7pm, in off-peak time, were recorded as being made just before 7pm, in peak time. Telecom Mobile admitted that it did not act quickly enough to fix the fault, or notify its customers of the problem.

Commerce Commission Director of Fair Trading Deborah Battell said that the settlement was a win for customers who had been wrongly charged for calls. "The difference between peak and off-peak rates is a key driver of customer behaviour," Ms Battell said. "Many customers wait until just after 7pm to make off-peak calls, so a time discrepancy of just a few minutes has a big impact."

The Commission considered that Telecom Mobile had not done enough to ensure the representations it made about peak and off-peak calls were accurate in practical terms, for billing purposes, Ms Battell said.

The Commission had begun a prosecution of Telecom Mobile which will be withdrawn as part of the settlement."

Posted to the site on 6th October 2005