Vodafone NZ guilty of misleading customers
Telco’s FibreX claims breached Fair Trading Act.
Vodafone NZ has lost its battle with the Commerce Commission over the naming of its FibreX broadband service, with a judge finding the telco guilty of misleading conduct.
The commission argued that people were likely to think they were being connected to the ultrafast broadband (UFB) network if they signed up for Vodafone’s FibreX product.
FibreX was offered in Wellington, Kapiti and Christchurch between 2016 and 2018. Marketing of the product included phrases such as “FibreX is here” or “FibreX has arrived”.
Judge Sinclair found Vodafone’s branding and advertising was liable to mislead consumers into thinking FibreX was delivered over a fibre-to-the-home network, the same as UFB, when it wasn't.
FibreX used fibre optic cable to the street cabinet, then copper cable from there to the home.
Vodafone was found guilty of nine charges under the Fair Trading Act.
We first warned people about FibreX in 2017 after getting complaints from consumers about the service. One Consumer NZ member told us they’d been close to signing up to a plan when the salesperson mentioned they wouldn’t be linking to fibre but to Vodafone’s cable network.
In court, Vodafone’s lawyer said the telco didn’t want to use the word "cable" because customers associated it with “slow outdated and aging technology”. She told the court the addition of "X" in the brand name was designed to differentiate it from fibre.
The commission brought in Professor Phillip Gendall, a marketing expert from Otago University, who said people would assume a business wouldn’t be allowed to call a product something it wasn’t.
“I think they would look at FibreX and think ‘well fibre, that suggests fibre’, so they wouldn’t be allowed to call it fibre if it wasn’t,” Prof Gendall said.
Commission chair Anna Rawlings said the case reinforced the importance of clear marketing, including of the product name.
Businesses “must not operate under the assumption that consumers will make further inquiries to find out exactly what is being offered to them,” Ms Rawlings said.
Vodafone is due to be sentenced later this year.