Kogan chief Ruslan Kogan.
When Ruslan Kogan launched his prepaid mobile phone service in December, tens of thousands of people signed up for deals touted as having "unlimited" calls and texts with either 2GB or 6GB of data.
But many of those same people are now finding it may have been too good to be true.
Neil Gill from Queensland with his girlfriend.
Mr Kogan's firm, Kogan Mobile, has been disconnecting the services of prepaid mobile customers who Kogan believe have made too many calls, sent too many texts or used too much data.
Since launching, the service has gained about 100,000 prepaid customers, a meteoric rise likely driven by the fact many of Kogan's other technology products are bundled with a Kogan Mobile prepaid SIM.
In December, Mr Kogan said the mobile market was "ripe for disruption".
"Providers are taking customers for granted and confusing the s--- out of customers," he said. "Things like $49 for $500 worth of calls – what does that even mean?"
Now the tables have turned. The question facing Mr Kogan today: What does "unlimited" mean?
As a result of his company's use of the word, Mr Kogan has been given a torrid time by customers and the telco industry this week.
"Going H.A.M [Hard as a Mother F-----] fighting telco industry goliaths," he wrote on Tuesday. "I wish I could explain how these dinosaurs operate. POSITIVE: Got a story for my grandkids."
Those disconnected, such as Neill Gill in Queensland, were told via email that they were using Kogan's services for business purposes, despite that not being the case in many situations.
Mr Gill said he didn't use data on his $29 prepaid plan, but did like to use the service to "have a yak" to his girlfriend – who lives an hour away – and his father, who lives in Western Australia.
Each call Mr Gill made lasted at most about 1.5 hours, he said.
The communications regulator, the Australian Communications and Media Authority (ACMA), is now under pressure by the Australian Communications Consumer Action Network (ACCAN), the peak body that represents consumers on telco issues, to investigate Kogan Mobile's plans.
Elise Davidson, spokeswoman for ACCAN, said ACMA had clear guidelines in its telecommunications consumer protections code that Kogan appeared to be breaching.
If a telco is found to breach the code, hefty fines can be placed on a company.
"ACMA have been really clear that words like 'unlimited' and 'cap' can't be used in advertising if the product actually does contain limits or the cap is a minimum spend," Ms Davidson said.
"Kogan calling plans 'unlimited' is something the ACMA will probably be looking at," she said.
Separately, Ms Davidson said from March 1 all telcos were required to provide a one to two-page document called a "critical information summary" that outlines exactly what is included in a plan.
Kogan did not appear to have one and could be breaching ACMA's code, Ms Davidson said.
"I think [Kogan Mobile's] idea that people are using the product for business because their usage is too high is arbitrary and is not a great way to establish a relationship with new customers," she said. "If someone uses their phone and downloads a lot of data that doesn't necessarily mean they are running a business - they may just have a very active social life."
The same applied to those making a lot of calls or sending a lot of texts, Ms Davidson said.
"The bottom line is a customer would reasonably expect that if they have 6GB of data or unlimited texts/calls they can use it how they want over the period of time stipulated," she said. "To put these kinds of restrictions in place – not letting people know they are going to be cut off until they recharge, for example – that's just bad customer service."
The Telecommunications Industry Ombudsman (TIO) said it had received "a small number of complaints from Kogan consumers" who said their service had been suspended. The Ombudsman wouldn't give details about the total number of customers who had complained.
It referred Fairfax Media's questions about enforcement of the Telecommunications Consumer Protections code to the ACMA, which said it was "actively monitoring compliance".
"We can't confirm or deny if we are investigating this company," ACMA said.
Telstra, the network Kogan states that it uses "part" of, said it played no role in enforcing Kogan's acceptable use policy, which is being used to disconnect customers who use too much.
Many telcos have an acceptable use policy but they rarely enforce it.
Telstra added that it had only one wholesale relationship to resell prepaid mobile services, with ispONE. Though Kogan won't say, it's highly likely that it is reselling ispONE's Telstra service.
A spokesman for Kogan Mobile said the company was "currently resolving" issues raised.
"Kogan will provide a comment before the end of the week," the spokesman said.
with Aleisha Orr
Note: After publication Kogan's spokesman contacted Fairfax to say Kogan did have a critical information summary. It referred Fairfax to the URL koganmobile.com.au/plans/, which has the phrase "critical information summary" on it with some information below it. The phrase is not displayed at kogan.com/au/mobile/, which is the first URL that appears in a Google search when looking for Kogan Mobile's plans. The ACMA's code requires each critical information summary document to set out key information about the service being offered, including "any exclusions or important conditions, limitations or restrictions". The Kogan Mobile critical information summary does not state explicitly that it will disconnect customers on "unlimited" call/text plans if Kogan finds a customer using what it deems as too much of its service.
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