ASX telco penalised $2.5m for misleading NBN speed claims

Dodo and iPrimus admit to dodgy ‘typical evening speed’ claims as the Federal Court hands down fines.

| More on:
A loudspeaker shoots out the words FINED against a blue backgroun

Image source: Getty Image

Vocus Group Ltd (ASX: VOC) will pay $2.5 million in penalties after its Dodo and iPrimus retail brands made misleading claims about its NBN broadband speeds.

The Federal Court handed down the fines after an Australian Competition and Consumer Commission (ACCC) investigation.

The consumer watchdog announced Wednesday that both internet service providers admitted their ‘typical evening speed’ claims made between March 2018 and April 2019 were misleading.

“The ACCC brought this case because we were concerned that the methodology which the Vocus Group used as the basis for its speed claims cherry-picked only the fastest speeds its network could deliver, and ignored the slower speeds many of its customers experienced,” said ACCC chair Rod Sims.

“These misleading speed claims meant consumers could not accurately compare different offerings and make an informed choice about their broadband provider.”

Vocus shares were flat Wednesday morning, remaining at $5.46.

A Vocus spokesperson told The Motley Fool the company has been compliant since April 2019.

“In 2021, Dodo and iPrimus implemented a range of improvements to its network to deliver a better customer experience, including enhanced speed measurements,” the spokesperson said.

“As noted by the court, there was no evidence that consumers received internet connection speeds lower than those advertised at any time, or incurred any financial harm.”

Dodo and iPrimus used ‘flawed’ methodology to measure NBN speeds

Sims said accurate information on broadband speeds were critical for NBN customers to choose the best retailer for their needs.

“Despite clear ACCC guidance on making broadband speed claims, Vocus Group used a flawed methodology which was inconsistent with that guidance, and misled consumers about the speeds of its plans.”

The ACCC noted Dodo and iPrimus co-operated with its enquiries and admitted its liabilities in court.

In calculating the $1.5 million penalty for Dodo and $1 million for iPrimus, Justice Bernard Murphy said he took into account Vocus’ internal choices.

“[Dodo and iPrimus] chose not to adopt the methodology proposed as industry best practice by the ACCC and instead developed and applied the Vocus Methodology, which as it eventuated had a number of deficiencies.”

Vocus is Australia’s fourth largest telecommunications provider, with a 5.2% market share of NBN services. Its broadband brands service a combined 430,000 retail customers.

Vocus is currently awaiting shareholder approval to be sold off to a consortium led by Macquarie Infrastructure and Real Assets (MIRA) and Aware Super.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News