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Telstra hit with AU$102,000 fine for "misleading" iPhone 6 ad

Telstra has been "surprised" with an infringement notice and a large fine from the ACCC for what the regulator called a "misleading" ad for its iPhone 6 phone and plan bundle.

An image showing the iPhone 6 ad with full pricing in the fine print. ACCC

Telstra has been hit with a AU$102,000 fine by the ACCC for misleading advertising relating to an ad for the iPhone 6. The advertisement was used to promote its phone and plan bundle for the device, but the ACCC deemed that it misrepresented pricing to consumers.

But while Telstra has paid the fine, it says it was "surprised" that it was pulled up for what it called a legally compliant ad.

The telco was issued with the infringement notice and penalty in relation to an A3 advertisement that appeared in The Age newspaper on September 27, 2014. The ad showed a large image of the iPhone 6, with a featured price of AU$70 per month, however the ACCC took issue with the fact that an additional cost of AU$11 per month was only displayed in the fine print.

By prominently displaying a AU$70 per month price tag for a deal that would actually cost AU$81 per month, the ACCC said Telstra was "misleading" customers.

"The ACCC considered that Telstra's advertisement misrepresented the price of the phone and phone plan bundle to consumers," the ACCC said in a statement.

"The infringement notice was issued because the ACCC had reasonable grounds to believe that Telstra had made a false or misleading representation about the price of goods or services."

However, despite paying the fine, Telstra has contested that its advertisement showed the full costs of the plan bundle, as required by law. In a statement, a Telstra spokesperson said:

We were surprised to receive the infringement notice, as our ads prominently stated the mobile plan cost, the handset cost and the total minimum cost as legally required, and were in line with the way many others in the industry advertise mobile plans with handsets. The ad in question was displayed in a full newspaper page so all the text was much larger.

Even though we are strongly of the view our ads complied with the law, we have paid the notice. In addition, we've made some changes to our advertising to make it even clearer to customers what they will pay each month for a plan and handset. We now consider this matter closed.

We think there is scope for these sorts of issues to be resolved in the future through constructive engagement between industry and the regulator, rather than through the use of formal enforcement mechanisms.

The ACCC has said that payment of the AU$102,000 penalty (the amount set for a publicly-listed company) is not an admission of contravening Australian Consumer Law. However, ACCC Chairman Rod Sims said it was important that consumers are able to understand the "true cost" of advertised products so they can make informed buying decisions.

"Businesses must be careful about using attention grabbing headline prices to ensure that their advertisements do not mislead consumers about the actual price they will have to pay," he said. "This is especially the case for bundled goods and services like phones and plans.

"Advertising that is clear allows consumers to make informed purchasing decisions."