Allegedly misleading behaviour by some of its salesmen has landed People Telecom - now owned by M2 Communications - in trouble with the Australian Competition and Consumer Commission (ACCC).
According to the ACCC, People Telecom’s telemarketing and door-to-door sales agents – hired through third-party marketing firms – had transferred customers to the network either without consent or through deception.
It is alleged the sales representatives would present themselves as working on behalf of a customer’s current telco provider or assert People Telecom was a subsidiary of the provider.
The agents then allegedly claimed it was a necessity to change to People Telecom and it would not affect any contractual or billing arrangements with the current carrier.
The issue, which contravenes the Trade Practices Act 1974, came to a head after the industry watchdog received numerous complaints from consumers.
It affects customers that signed up through telemarketing or door knockers between January 1, 2008, and July 30, 2009.
M2 Communications CEO, Vaughn Bowen, said the activities in question happened prior to his company taking over People Telecom.
M2 Communications (ASX: MTU) bought the telco in April 2009 for $17 million.
“One of the first orders of the business we undertook when taking over was actually disbanding the telemarketing mode of selling,” he said. “We didn’t believe it was true to how we’d like to represent the brand and subsequent to that, the ACCC’s request for information came through."
People Telecom has voluntarily entered into a court enforceable undertaking which will see the telco write to concerned customers, place a notice on its website and offer to terminate contracts for free as well as refund or waive debts accrued due to the misrepresentation.
It is also required to install a trade practices compliance program with a complaints handling system and a commitment to never engage in misleading sales activities again.
People Telecom continues to use field-based business-to-business sales agents but has scrapped consumer door-to-door sales activities.
This is the second telco this week to be face action from a government body. The Australian Communications and Media Authority (ACMA) is taking gotalk to the Federal Court claiming it had breached the Do Not Call Register Act.