The consumer watchdog has failed in its legal action against telecommunications giant TPG, with the Federal Court finding the company did not unfairly charge customers a non-refundable bond.
Clients signing up to mobile, internet and home phone plans were required to make a $20 prepayment to TPG and maintain that balance to cover any outstanding future costs, in a move the Australian Competition and Consumer Commissioner claimed was misleading or deceptive and unfair.
"TPG has shown that the forfeiture term is reasonably necessary to protect its legitimate interests," Justice David O'Callaghan wrote in his judgment, handed down on Friday.
"Those interests were identified as including the minimising (of) serious effects that bad debts had on the telecommunications industry and the cost of telecommunication services."
Under the prepayment clause, TPG would deduct from the deposit any charges not included in plans, and automatically top-up the bond to $20 using a customer's bank account or credit card once the balance dropped below $10.
On expiry of the plan, any balance was forfeited to TPG.
Despite the plan, the court was told TPG still suffered losses of more than $9.5 million in unrecovered mobile and fixed-line usage charges in the six years up to May 2019.
The commission's arguments included that the forfeiture term was unfair because it applied to all customers, including those who never exceed their plan charges.
But TPG said the prepayment system was an important element of being able to deliver a cheap service.
"Bad debts and collections have been a significant overhead cost that telecommunications consumers have been required to bear. The TPG arrangements improve that efficiency for the benefit of all consumers," lawyers for the company told court.
Justice O'Callaghan ordered that the proceeding be dismissed and that the commission pay TPG's legal costs.
TPG lawyer Tony Moffatt said the company had only ever tried to offer customers a competitively priced product.
"As part of those efforts, we have always looked for innovative ways to be more efficient," he said in a brief statement.
"We were disappointed that the ACCC decided to bring these proceedings ... and are pleased to have been vindicated."
The commission was not deterred by the court decision.
"We will continue to take cases against telco businesses that we consider are making misleading claims about their services," ACCC chair Rod Sims said.
Australian Associated Press