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Internet service provider (ISP) Dodo has been hit with a $360,000 fine for overstating what its NBN service could achieve.
The company, wholly owned by Vocus Group (ASX: VOC), has agreed to refund around 16,000 customers for claims that its entry-level NBN broadband plans were 'perfect for streaming'.
The plans in question were determined by the Australian Competition and Consumer Commission (ACCC) to not be an adequate solution for streaming at all.
These entry-level plans included maximum speeds of 12 megabits per second, and some only had 10 gigabytes of included data.
"We were concerned that Dodo customers on these plans could not reliably stream high quality video, particularly when others in the household were using the internet at the same time. At 12Mbps, Dodo's customers could not stream ultra HD video at all," says ACCC Chair Rod Sims.
In fact, most of the minimal 10GB of included data would be eaten up quite quickly if the service was used primarily and regularly to stream video content; high definition streaming on Netflix uses up to 3GB of data per hour.
"With these plans a customer would have to pay extra if they streamed just two or three movies," says Sims.
"We don't believe NBN plans with just 10GB of included data are 'perfect for streaming'."
"Consumers rely on how internet providers describe their services when choosing the best broadband plan for their needs, so these descriptions must be accurate."
"It is simply unacceptable for an internet service provider to tell consumers that their services are 'perfect' for a particular use, and to then charge them extra when they use the service as advertised," Mr Sims said.
"The ACCC will continue to address consumer issues in the provision of broadband services, including misleading use and performance claims made by providers."
The 16,000 customers affected by excess charges incurred during the 'perfect for streaming' promotional period are eligible to receive a refund for those charges. They will also be offered the option to exit their contract at no cost.
In January the NBN urged customers to reach out to their ISPs if they were experiencing slow connection speeds as they may have been eligible for a refund.
Telstra, Optus, TPG, iiNet, Internode, Dodo, iPrimus and Commander have each admitted that they likely made false or misleading representations about the connection speeds NBN customers could experience.
The consumer watchdog has accepted undertakings from each of these eight RSPs that they would contact more than 142,000 affected consumers to offer them a range of options, such as moving to a lower speed plan of their choice, or exiting their contract and receiving a refund.
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