Commerce Commission warns Sky TV over possible breach of Fair Trading Act

A $1 upgrade marketing campaign by Sky Network Television Limited (Sky) has resulted in a warning from the Commerce Commission for potentially misleading customers.

The Commerce Commission launched a Fair Trading Act investigation of Sky earlier this year. It followed a complaint from a customer who had wanted to take advantage of a Sky promotion that offered existing subscribers an upgrade to a selected premium channel for $1 for a month, with the $1 donated to the Starship Foundation.

The customer complained that after ringing the Sky customer service line to sign up for the deal, and being left waiting on hold for an extended period, he requested the upgrade via Sky’s Interactive Voice Recognition phone service.

However the customer found that he was charged the standard $25 for the upgrade rather than the $1 promoted.

On investigation the Commerce Commission found that a further 2,633 subscribers were also incorrectly charged.

“The Commission believes this may have been a breach of the Fair Trading Act. We have decided to issue a warning to Sky in this instance as they have fully cooperated with our investigation and acted quickly to put the matter right,” said Commerce Commission Competition Manager Greg Allan.

When contacted by the Commission, Sky conducted its own investigation, which established that its Interactive Voice Recognition phone service had not been updated with the correct pricing information. Sky admitted its mistake and has credited the affected subscribers. Sky has also ensured it has donated the correct sum to Starship Foundation. In total they have credited affected customer $55,990.

“Sky’s prompt response to the issue, and to putting matters right, is commendable. The Commission aims to address consumer harm where it occurs as quickly as possible. Where this can be achieved without the need for stronger enforcement action consumers see a quick result, the business in question learns a lesson, and the Commission can turn its attention to other harmful conduct,” said Mr Allan.

In its warning letter, however, the Commission points out it will continue to monitor Sky’s conduct and any future breaches of the Fair Trading Act might result in stronger action.

Background

Only a court can decide if the Fair Trading Act has been breached. Courts can impose penalties for a breach of up to $200,000 for a company and up to $60,000 for an individual.

Media contact:  Allanah Kalafatelis, Communications Manager
Phone work (04) 924 3708, mobile 021 225 4417

Victoria Rogers, Senior Communications Adviser
Phone work (04) 924 3709, mobile 021 225 4454

Commission media releases can be viewed at www.comcom.govt.nz/mediareleases