Vodafone's quarter-cent error

By Phil Boeyen, ShareChat Business News Editor

Wednesday 18th April 2001

Mobile phone operator Vodafone has refunded $35,000 to customers after overcharging them for cellphone text messages.

The refund follows a Commerce Commission investigation, which found that although the mobile company advertised that text messages cost just 20 cents to send, the true cost was 20.25 cents.

Commission chairman John Belgrave says that the Vodafone case is a strong message to all advertisers that inadvertent breaches of the Fair Trading Act are not protected from Commission investigations and enforcement action.

"The Act puts the onus on advertisers to ensure that their message is correct. If claims are inadvertently false or misleading, then they can still breach the Act."

Mr Belgrave says that between May and July last year, Vodafone advertised on television, on its web site and in newspapers that "a text message is only 20 cents to send to another mobile on the Vodafone network while the true cost was 20.25 cents.

"Overcharging consumers 0.25 cents per text message for three months gave Vodafone an additional $35,000.

"This case shows very clearly how a small detriment to each individual consumer-just a quarter of a cent per call-can become a big total detriment to consumers, and potentially a big gain to a trader."

Vodafone told the Commission that the overcharging was an inadvertent mistake in rounding to allow for GST.

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