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Telcos outed for unfair terms

Seven telcos have amended their consumer contracts to remove potentially unfair terms following a Commerce Commission review.

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The commission identified 66 potentially unfair terms in the contracts of Spark, Vodafone, 2degrees, Flip, Orcon, CallPlus and MyRepublic.

Since March 2015, the Fair Trading Act has banned unfair terms in consumer contracts. As a result of its review, the commission issued the telcos with compliance advice letters reminding them of their obligations under the Act.

Commissioner Anna Rawlings said many of the potentially unfair terms were common to all contracts. They included terms that attempted to limit a company’s liability for loss caused to customers. These terms were “invariably drafted for the benefit of the company”, the commission said.

The review found many contracts also contained clauses that allowed the company to unilaterally vary the agreement. These clauses were often broadly drafted allowing a company to change the contract where there was no legitimate reason to do so, it said.

The commission also challenged contract terms that made customers solely responsible for unauthorised use of their accounts, including hacking and fraudulent access.

Ms Rawlings said telcos had been receptive to the commission’s concerns, amending or agreeing to amend their contracts. “Most New Zealanders have one or more standard form consumer contracts with a telecommunications company and they can now be more confident about the fairness of those contracts,” she said.

The commission is also looking at unfair terms in electricity, credit and gym contracts. A report on its findings is expected later this year.

Our recent review of gym contracts found many contain terms that risk breaching the Act.

Company Number of potentially unfair terms identified Nature of the potentially unfair terms identified
Spark 9 Terms relating to limitation of liability, unilateral variation of services, retention of prepay credit on termination, limitation of intellectual property rights, and responsibility for unauthorised charges.
2degrees 7 Terms relating to limitation of liability, unilateral variation of services, responsibility for unauthorised charges, and termination without reason.
Flip 5 Terms relating to limitation of liability, contracting out of consequential loss, charging undisclosed fees, and responsibility for unauthorised charges.
Orcon 5 Terms relating to limitation of liability, contracting out of consequential loss, charging undisclosed fees, and responsibility for unauthorised charges.
Vodafone 5 Terms relating to limitation of liability, unilateral variation of services, contracting out of the Fair Trading Act, unilateral right to restrict or suspend services, and contracting out of consequential loss.
CallPlus 1 Term relating to limitation of liability.
MyRepublic 34 Including terms relating to unilateral variation of contract, avoiding or limiting performance of the contract, unilateral interpretation of contract, assignment of contract, limitation of liability, variation of service, penalty clauses, and contracting out of Fair Trading Act.
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