ACCAN Informed Consent Project (21 August 2009)

4.3. Lack of informed consent

Case study 3 – [from ACCC]

In the Project Survey, caseworker organisations and regulators reported a moderate to high volume of complaints regarding the lack of informed consent. This covered situations where key information was not provided or where the information that was provided was misleading.

Laws and codes in the communications sector provide some guidance on the information that should be provided to consumers. Although there is limited detail for most products and services, more precise requirements apply to customer transfers.

These laws and codes are backed by Trade Practices Act 1974 (Cth) restrictions on the provision of misleading information, which have proved useful in major investigations.

Case study 3 – [from ACCC]

The ACCC instituted proceedings against EDirect and VIPTel for breaching section 52 of the Trade Practices Act 1974 in cases they made misleading and deceptive representations to consumers to induce them to enter contracts for phone services. From February 2006 to March 2007 EDirect and VIPTel made representations to possible customers, through telemarketing phone calls and over the Internet regarding: the coverage of their network, their fixed monthly payments, the included services, the future savings, their local call pricings and the ability to terminate a contract at any time (without charges). It was found the statements made were often contrary to the true position and could be seen to mislead or deceive.

For example, through the VIPtel website it was represented that network coverage and mobile telecommunications services were available ‘Australia-wide’, in circumstances where coverage was only available in areas immediately surrounding main towns. The court further found that the conduct of EDirect in dealing with complaints relating to this issue was ‘egregious’. When one customer living in an unserved remote area reported the network problem for the third time he was told that the problem might simply be with his house and that he should try down the street.

The ACCC and EDirect settled the matter and brought the orders before the court to effect the settlement. The court briefly discussed the ability to detect future possible breaches of section 52 by telemarketers, particularly in remote areas of Australia. Within the discussion (paragraphs 32-34) the judge noted that only in Victoria is there legislation regulating this aspect of telemarketing, requiring informed consent be given and a voice recording be made. It was found that the orders given by the ACCC were enforceable by the Court, requiring that EDirect not make any representations to consumers which were not accurate, or based on reasonable grounds. [16]

Although complaints related to informed consent represented the highest volume of consent complaints in the Project Survey, mechanisms for addressing this specific issue are difficult to identify.

Prohibiting the use of misleading information obviously does have strong support, but this is a ‘negative’ requirement and it does not help to provide guidance on what information should be provided. As noted above, industry practice ranges from providing no information to the consumer through to 57 pages of detailed information. There is no agreement regarding the ideal amount of information that should be provided to a consumer.

To date the approach has been to prescribe detailed information that must be provided in circumstances that result in a high volume of complaints (customer transfers and MPS). For most other issues organisations can determine how much information they provide.

Reliance on negative requirements (Trade Practices Act 1974 prohibitions) and ad hoc reactive requirements for specific products may not be sufficient to address the high volume of consumer complaints regarding a lack of informed consent. Mechanisms for improving informed consent are worthy of further study and policy development. In the meantime, some of the other specific recommendations in this report (such as establishing a consistent definition of consent) may have a ‘knock on’ effect on processes for obtaining informed consent in the communications sector.

[16] Australian Competition and Consumer Commission v. EDirect Pty Ltd (2008) FCA 65, <http://www.austlii.edu.au/au/cases/cth/FCA/2008/65.html>. See also Australian Competition and Consumer Commission, ACCC alleges VIPtel Mobile telemarketing calls are misleading, press release, ACCC, 26 July 2007, <http://www.accc.gov.au/content/index.phtml/itemId/793554/fromItemId/621277>.





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