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15 August 2014

Telemarketing company fined nearly $170,000

Power Marketing misled people about Slingshot's services.

Telemarketing company Power Marketing Limited has been fined $168,750 over the calls it made on behalf of Slingshot.

Power Marketing pleaded guilty in the Auckland District Court today to 23 charges under the Fair Trading Act.

The total fines from the case are now at $418,750 - Slingshot pleaded guilty in 2013 and was fined $250,000 for its role.

The Commerce Commission received many complaints from 2009 to 2011 alleging Power Marketing was misleading customers about the service provided by Slingshot or was switching customers to Slingshot’s services without their consent, known in this industry as “slamming”.

Power Marketing cold-called people, improperly using a database called Wireline that was owned by Telecom, and tried to sell them Slingshot’s telecommunications services. It was during these calls that staff sometimes misled customers to try to get them to switch to Slingshot.

After the call, another Power Marketing employee would call the customer back claiming they needed to verify the details but the Commerce Commission said these calls were often vague and rushed so consumers were left confused about what they had agreed to. In some cases, the second call was used to verify a prior agreement to switch to Slingshot when no agreement had actually been made.

Commerce Commission consumer manager Stuart Wallace said the telemarketers were desperate to make sales, by whatever means possible.

“This is particularly disturbing as Power Marketing senior management were aware of an earlier warning by the Commission to Slingshot about similar conduct, but they continued to push staff to keep up their sales targets,” Mr Wallace said .

“It also had quite an impact on the individual consumers affected. Even more troubling in this case is that many of those affected were elderly and had no real interest in switching.”

He was hopeful new consumer laws that came into effect recently would help in cases like this.

“For door-to-door and telemarketing sales, there is now a five-day cooling-off period for consumers where they can cancel a contract for any reason. Plus, an increase in the penalties for these types of breaches should act as a deterrent for businesses,” Mr Wallace said.

See Consumer's article on your rights under the Fair Trading Act.

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