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Ombudsman monitors telemarketing complaints

15 December 2011

The TIO is monitoring a continuing practice by some telemarketers that mislead consumers into transferring their service under the guise of representing another telco.

The TIO’s systemic investigations team has looked into claims about potentially misleading sales practices by a number of small telcos, after monitoring complaints about service providers giving misleading advice during telemarketing calls. Consumers complain that the service provider suggests that they are the consumer’s existing service provider or another well known telco, or that the consumer is only agreeing to receive information, not transfer their service. Such complaints, where proved, indicate that the provider may not be complying with legislation and industry codes of best practice.

Often a telemarketing call has two parts: a “pre-sale” conversation where the product is broadly explained, and then a “verbal authorisation”, in which the consumer is taken through the terms and conditions and agrees to the transfer. The TIO has observed that where a consumer is misled during the “pre-sale” part of the transaction, they may remain misled in the verbal authorisation stage, where they agree to the transfer. As a result, they aren’t giving informed consent to transfer their services to the new provider.

The TIO investigates these kinds of complaints both on a case by case basis and if we identify a broader pattern of complaints, as a systemic issue. This is because any misleading conduct has the potential to impact a large number of consumers. If the telephone sales recording is not complete, or shows that misleading information was provided, the TIO might expect the new provider to waive all charges and allow the consumer to transfer their service back to their preferred provider. It might also ask the new provider to pay any early termination fees incurred as a result of the number being transferred away from the old provider without proper authority. We might also suggest to the consumer to have their phone number added to the Do Not Call Register, administered by the Australian Communication and Media Authority, so that they do not receive any more unsolicited telemarketing calls.

The TIO’s systemic investigations team has worked with a number of providers to help them ensure that they are gaining informed consent when signing up new customers. This often involves requesting that the service provider amend the scripts their telemarketers use so that they clearly identify the service provider and the product they are offering. We have observed that providers attract and retain customers where they market themselves based on the benefits of their unique service or product, rather than relying on the brand reputation of another service provider.

Systemic investigations have also resulted in service providers terminating contracts with rogue telemarketing agencies only interested in quick sales, and in implementing better quality assurance processes and record keeping practices. For instance, the TIO may recommend that a service provider record the whole conversation rather than just the verbal authorisation component, and that they listen to the full recording before they transfer a service over. That way they can be sure that the transfer is authorised and they have complete records to refer to if there is a dispute at a later date.

To date, these investigations have proved effective. However, if a service provider were to fail to address its processes, we are able to refer the matter to the Australian Communications and Media Authority or Australian Competition and Consumer Commission for further action.

Tips for consumers

  • if you do not wish to receive cold calls, you can place your number on the Australian Communication and Media Authority’s Do Not Call Register. This can be done online at www.acma.gov.au
  • if you receive one of these calls ask the telemarketer which company name will be on the bill you will receive. If it isn’t the name of your current provider, then they do not represent your provider
  • if you are unsure about the deal you are being offered, ask the sales representative to give you a phone number to which you can call them back so you can think about the offer
  • if you receive an unsolicited sales call and you do agree to the sale, you have a 10 business day cooling off period in which you can withdraw from the contract, according to Australian Consumer Law.

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