Kogan Mobile's acceptable-use policy 'illegal'
Kogan chief Ruslan Kogan. Photo: Luis Ascui
A prominent Australian telco lawyer has labelled as "plainly illegal" Kogan Mobile's acceptable-use policy, which the company has been using to disconnect heavy-use mobile customers.
The lawyer's comments come as Kogan said 0.2 per cent of customers had been affected by enforcement of the policy, which equates to 200 of about 100,000 customers.
Peter Moon, of Cooper Mills Lawyers, reviewed Kogan's acceptable-use policy and said it was illegal and breached both the telco regulator's Telecommunications Consumer Protections code and Australian Consumer Law in multiple ways.
Mr Moon wrote about his concerns in two blog posts at tcpcode.com.au. The posts have since been deleted however, after Mr Moon accepted a request for their removal by a lawyer acting on behalf of Kogan. Despite this, he said on Thursday that he stood by his comments.
In a critique of the policies, Mr Moon questioned the use of "unlimited" when describing Kogan mobile plans, said the acceptable-use policy was "unclear and ambiguous" and criticised the fact it stated it could be changed at any time by posting a note on Kogan's website.
"This breaches the 'unfair contract terms' rules in the Australian Consumer Law," Mr Moon said. "The days when a telco could say to residential/personal customers, 'The deal is whatever we say it is from time to time', are long over."
Another telco lawyer, who did not want to be named for conflict reasons, backed up Mr Moon's comments, agreeing that Kogan had "some work to do to bring their documents and advertising into legal compliance".
Customers Kogan has been telling to leave its network were told they were making too many calls, sending too many texts or using too much data in a certain period on its prepaid "unlimited" call/text plans with either 2GB or 6GB of data.
In recent years the Australian Competition and Consumer Commission has cracked down on use of "unlimited", but said in relation to Kogan that it did not “ordinarily comment” on whether specific issues or businesses were being investigated. As recent as this month, the commission also cracked down on telcos, including Telstra and TPG, using unfair contract terms.
The Telecommunications Industry Ombudsman said it had "received a small number of complaints" from Kogan consumers but could not give the total number until May, when it releases its quarterly statistics.
A Kogan spokesman said the company's terms and conditions, including its acceptable-use policy, were drafted and prepared by Gilbert + Tobin Lawyers, who were "widely regarded as one of the leading telecommunications law firms in Australia ... also used by Telstra".
Another part of the policy Mr Moon said breached Australian Consumer Law, as well as the telco industry's code, was Kogan claiming it could terminate any of its customers without warning.
The lawyer also labelled Kogan's Critical Information Summary as having "a long list of defects". The one-to-two page CIS is required as of March 1 under the Telecommunications Consumer Protections code to be displayed at point of sale and is meant to provide information on what is included in a plan.
Mr Moon said the Kogan CIS was severely lacking in the detail required as part of the code.
On Wednesday, Fairfax Media reported that Kogan did not have a CIS. A Kogan spokesman later contacted Fairfax to say it did have one, and referred Fairfax to the URL koganmobile.com.au/plans, which has the phrase "critical information summary" on it.
But the phrase is not displayed at kogan.com/au/mobile, which is the first URL that appears in a Google search for Kogan Mobile.
Mr Moon said that where the CIS was displayed, it failed to list the Telecommunications Industry Ombudsman's contact details, as required by the code. It also did not prominently state as a single figure the total buy price of each plan, and did not list the minimum or maximum monthly charge payable under each product's offer.
Further, Mr Moon said it failed to disclose the acceptable-use policy's existence, as well as Kogan's clause that those who ran a business could not use the company's service.
Summarising, the lawyer said Kogan's CIS was "so wide of the mark" from adhering to the telco code that it was "more likely to breach the Australian Consumer Law's anti-misleading conduct requirements".
Australia's communications regulator, the Australian Communications and Media Authority, would not comment on Kogan directly, but said it had identified and written to 38 telcos who did not appear to be complying with CIS requirements.
Compliance with the requirements from the telco industry as a whole had been "less satisfactory than compliance with the earlier code rules", said ACMA consumer interests manager Alan Chalmers.
Mr Chalmers reminded telcos that they needed "to be very careful with the way they use terms such as 'unlimited' when they have acceptable-use policies where there are limits to usage".
If a telco was non-compliant with the code, ACMA could issue a formal warning, which directs it to comply with the code, he said. ACMA could also issue infringement notices or start court action.