CBA, Optus Fined for Misleading Ads
The Commonwealth Bank of Australia (CBA) and Optus were fined for their misleading advertisements. It is the second violation for CBA with the Australian Securities and Investments Commission (ASIC) in two months.
ASIC said the bank misled customers by posting an ad on its Web site in December that urged customers to register immediately to increase their credit limit and warned that they will miss out opportunities to access extra funds if they failed to register by July 1, 2012.
The ads went against new rules that restrict credit card issuers from sending out unsolicited invitation to customers to hike their credit limits, unless they agreed. ASIC said the ad was misleading because customer can request for a credit limit increase any time and provide or withdraw consent for unsolicited credit offers at any time.
Although 96,000 customers provided consent based on the ads posted on Dec 12 and 13, CBA said it not rely on consents given on those two dates but instead will contact them to correct the misleading impression as well as to give proper information of their rights. The lender also agreed to withdraw the ad.
In January, CBA was rapped by ASIC for not mentioning on its ads a $350 fee for home loan rates.
Following the second run-in with ASIC, CBA accepted an enforceable undertaking from the regulator.
Meanwhile, a Federal Court agreed to lower the $5.26-million penalty slapped by Justice Nye Perram of New South Wales on Optus to $3.6 million for misleading broadband advertising. The court lowered after Optus argued that Mr Perram made an error on his judgment of key facts.
Mr Perram found 11 of Optus's ads for its Think Bigger and Supersonic broadband plans were misleading. However, Optus said the justice made a mistake by counting each advertisement as a single offense and failed to appreciate that consumers did not suffer much despite the breach.
After Optus's appeal, Chief Justice Patrick Keane, Justice Paul Finn and John Gilmour reduced the fine made by Mr Perram although they still counted each violation individually. The justices also ordered Optus not to advertise plans that split monthly data allowances into peak and off-peak periods.
They pointed out that Optus, a wholly owned unit of Singapore Telecommunications, is a repeat offender. In May 2011, the service provider was fined $178,200 for its misleading Max Cap mobile plans and in February 2011 for unlimited broadband plans advertisements that cut speeds that cut speeds once a download limit is reached.