Zen Telecom has been fined AU$225,000 by the Federal Court for breaching Australian Consumer Law (ACL) by way of misleading conduct and false or misleading representations during telemarketing calls in the 12 months ended August 2013.
According to a statement from the Australian Competition and Consumer Commission (ACCC), the telecommunications supplier was found guilty of presenting itself on behalf of Telstra or as business associated with Telstra despite having no connection to the company.
The ACCC said Zen's methodology involved cold-calling consumers to promote the sale of fixed-line telco services. The first phase of a number of calls -- which involved the introduction as an affiliate of Telstra -- would not be recorded, although the subsequent contract negotiation would be recorded.
"Zen breached laws that are specifically designed to protect consumers from unscrupulous sales tactics in unsolicited marketing," ACCC commissioner, Sarah Court, said.
"The ACCC was concerned that by the time consumers progressed to the second stage of the call where they agreed to acquire services from Zen Telecom, they had already been misled by misrepresentations of an association or affiliation with Telstra which had been made during the marketing part of the call."
The Court also found Zen had breached the unsolicited consumer agreement provisions of the Australian Consumer Law (ACL) by: failing to provide consumers with a copy of their contract within five business days; failing to provide consumers with an agreement that clearly stated Zen's address and informed consumer of their cooling-off rights; failing to provide consumers with a notice to cancel the contract; supplying services to consumers during the 10-day cooling-off period.
In addition to the pecuniary penalties, Zen has been ordered to publish corrective notices on its web site and in daily papers across Australia.
Zen also trades as XLN Telecom, Venus Telecom, Action Telecom, Alpha Talk, and Telko Key.
Sign up for CIO Asia eNewsletters.