Spark refunds millions of dollars after misleading customers

Spark New Zealand has refunded nearly 113,000 customers after some were charged for a wire maintenance service they did not need or could not use or benefit from. The Commerce Commission has also issued Spark a warning.

Customers who believe they may have been charged for the wire maintenance service are urged to check the Spark website to find out if they are due a refund.

The Commission began investigating Spark New Zealand Trading Ltd (Spark) in 2020 following a consumer complaint. Between 2014 and early 2021, Spark charged more than 113,000 customers for a wire maintenance service, even though most would have had no need for it. Spark collected about $15.7 million over six years.

Commission chair Anna Rawlings said Spark’s conduct created an impression through its website that a wire maintenance service was suitable for all connection types when it was not. Also, it made misleading representations through invoicing its customers for the service that would be of no use or benefit.

“Businesses should not be charging customers for services that they don’t need or have no use for, or services that they cannot practically benefit from,” Rawlings said.

“If extra services or costs are charged, businesses must ensure that information about them is clearly disclosed to customers and is accurate, complete and easy to understand.

“Customers must be able to rely on information businesses provide to them when they are buying, contracting or being invoiced for services.”

Spark has since stopped selling the service to wireless and fibre connection customers. It is in the process of voluntarily refunding all wire maintenance service fees paid by customers and is putting system fixes and processes in place to prevent it being offered to these customers in the future.

Spark has already refunded about $15m, with about $348k still to be returned to 4921 customers.

Spark is trying to contact former customers, but those who previously had wireless or fibre broadband accounts with Spark and think that they might have been charged for the wire maintenance service should consult the Spark website to find out if they are entitled to refunds. More information for former Spark customers on claiming refunds is available on Spark’s website.

As at July 2022, 4921 former customers were still to claim their refunds, with 1223 former customers each eligible to receive more than $100.

This is not the first time Spark has been investigated for potential breaches of the Fair Trading Act. In 2019 it was fined $675k for making false or misleading representations in its customer invoicing. And between 2017 and 2019, Spark received several warnings from the Commerce Commission over various issues affecting customers, which also risked potentially breaching the Fair Trading Act.