ZFree not so free?

By Phil Boeyen, ShareChat Business News Editor

Friday 9th November 2001

The country's second largest telco, Clear, has come under fire from the Commerce Commission over advertising for its ZFree internet service and ordered to pay $15,000 in penalties.

The Commerce Commission says Clear has pleaded guilty in the North Shore District Court to five charges of breaching section 11 of the Fair Trading Act over its national advertising campaign for ZFree.

The Commission says Clear offered a free internet service to the public in a nationwide television and newspaper advertising campaign but failed to disclose that consumers in some areas of New Zealand would be required to make toll calls to connect to Clear's internet service provider.

"In addition, consumers who were not required to make toll calls were liable to pay Telecom's 0867 charge of two cents per minute, after 10 hours use per month," says the Commission.

"Consumers who were required to make a toll call or pay the 0867 charge were therefore liable to be misled over the offer of a free internet service."

Commission chairman, John Belgrave, says the emphasis in all of the advertising was that the ZFree service was free, and the Commission's concern centred on two particular areas.

"Firstly, consumers were liable to be induced into believing there was no extra cost to connect to the internet using the ZFree service.

"Secondly, the extensive advertising was liable to impede a consumers ability to accurately compare Clear's offer with those of competing service providers."

Mr Belgrave says the Fair Trading Act is designed to provide consumers with information that is not misleading so that they can make informed decisions.

"It is also designed to create an environment that allows fair competition to exist between retailers so that they are all competing on the same basis," he says.

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