Vodafone New Zealand
DATE OF MEETING
19 May 2015
No Grounds to Proceed
Complaint: The Vodafone website (http://www.vodafone.co.nz) advertised the cost of a new iPhone 6 16GB. It stated, in part:
Mobile with On Account plan
(with $1079 discount applied)
On Red+ plan 24 month term
If you already have Prepay or an On Account plan
Complainant, H. Hopkins, said: "Vodafone are advertising 'free' mobile phones on 24 month plans. The phones (in my case I was looking at the iPhone 6 16GB model) are advertised for $0 ... on a 24 month term. If you select the phone for further details on their website, the information reads 'Mobile with On Account plan (with $1079 discount applied) $0 on Red+ plan 24 month term.' This gives you the impression that there is no cost for the phone as they have subsidised the entire retail value of $1079. But when I enquired over the phone tonight, the Vodafone representative told me that the cost of the phone actually gets spread out over the 24 month term. Therefore it is not a $0 phone as advertised. The advertising is completely false and misleading to consumers.
Vodafone are using this method of advertising with a number of different handsets and I feel that it is extremely misleading to consumers. They are simply hiding the true cost of their 'free' or heavily discounted phones by charging more for the same plans offered to people who already own their own phones. Their phones are not free and therefore should not be advertised for $0."
The relevant provisions were Basic Principle 4 and Rule 2 of the Code of Ethics.
The Chairman noted the concern of the Complainant the advertisement was misleading as it advertised phones for free when the cost of them was actually spread over a 24 month plan.
The Chairman disagreed. She said the advertisement did not state or imply that the phone was 'free' in anyway. She said rather, the "$0" was the upfront cost of the iPhone 6, on a Red+ plan 24 month term.
The Chairman also noted the advertisement clearly stated one of the benefits of the Red+ plan 24 month was that customers got a "discount on a new mobile" which was paid for over the 24 months, not a free phone.
The Chairman also noted the Complainant's concerns the advertisement was misleading as the cost of the phone on a Red+ plan stated $0 "with $1079.00 discount applied" the $1079 being the cost of the phone on a prepay plan.
The Chairman was of the view this, while poorly phrased, did not reach the threshold to be considered likely to mislead the consumer as it was clear when the advertisement was read in its entirety that the upfront cost of the phone had been discounted, not that the phone was free.
As such, the Chairman said the advertisement did not met the threshold to be considered misleading and ruled the advertisement was not in breach of Rule 2 of the Code of Ethics and had been prepared with a due sense of social responsibility to consumers and society.
The Chairman said there was not apparent breach of the Advertising Code and ruled the complaint had no grounds for the complaint to proceed.
Chairman's Ruling: Complaint No Grounds to Proceed