Internet provider Dodo will repay 16,000 customers who signed up to the National Broadband Network after the competition watchdog bit back over claims its plans were perfect for video streaming.
The Vocus Group-owned provider will refund up to $360,000 in excess charges as part of a court-enforceable undertaking made to the Australian Competition and Consumer Commission after advertising describing some plans as "perfect for streaming" was found to be likely to mislead.
Dodo had advertised NBN broadband plans with the video streaming claim even when the plans were for maximum speeds of 12Mbps and had 10GB of included data. The advertising ran from November 2015 to March 2018.
Streaming video service Netflix recommends 25Mbps for ultra high-definition content and 5Mbps for high-definition.
ACCC chair Rod Sims said in a statement that the regulator was concerned customers could not reliably stream high quality video, particularly with more than one person using the internet, and a modest amount of streaming would blow their data allowance.
"At 12Mbps, Dodo's customers could not stream ultra HD video at all," Mr Sims said.
"According to Netflix, high definition streaming uses up to 3GB of data per hour. With these plans a customer would have to pay extra if they streamed just two or three movies," he said. "We don't believe NBN plans with just 10GB of included data are 'perfect for streaming'."
The ads were displayed online and in pamphlets and posters in Dodo Kiosk retail stores.
The refunds will be given to current and former customers on related plans who were slugged with extra data charges during the period when the ads were published. Affected customers are also able to end their contract with no exit fee.
Customers will be emailed with the offer to exit their broadband contract and refunds will be automatically credited to their accounts.
"It is simply unacceptable for an internet service provider to tell consumers that their services are 'perfect' for a particular use, and to then charge them extra when they use the service as advertised," Mr Sims said.
Less than 3 per cent of customers were slugged with excess usage charges, at an average of $23 for a subscriber, data provided by Vocus shows.
Vocus chief executive of business and consumer Antony de Jong said in a statement that the company apologised for the error.
"We want the Dodo brand to stand for simplicity and fairness and endeavour to reflect these values in all customer interactions," Mr de Jong said.
"Our team will contact impacted current and former customers as soon as possible. Further, we ceased new sales of that specific NBN plan and promotion some time ago, turning our focus to offers that deliver a better experience."
- SMH/The Age