4 September 2009
ACMA moves to protect Web Ace customers from direct debit scam
The Australian Communications and Media Authority has used its regulatory powers to help stop fraudulent billing practices by internet service provider, Web Ace. The ACMA has issued a direction to Web Ace to comply with the Telecommunications Consumer Protections Code C628:2007 (the code). Failure to comply with the code could incur civil penalties of up to $1 million.
Jason Kenneth McKay (trading as Web Ace) has been deducting money from customers’ credit card accounts without their authority. The monies deducted have proved difficult, if not impossible, for customers to recover.
Customers signing up with Web Ace often authorise bill payment through automatic direct debits from credit card accounts on the basis that the money deducted will cover agreed upon amounts for services. What customers did not expect was that Web Ace would take money from their accounts at other times and for different amounts, without their prior knowledge or consent.
The ACMA has found that Web Ace is breaching the code. Under the code a bill must be provided to customers paying non-fixed amounts before an automatic direct debit takes place to allow them an opportunity to view, query or dispute the bill before payment is made. It also requires that direct debits must be in accordance with their authorisation.
‘In issuing this direction, the ACMA has taken enforcement action to ensure that Web Ace’s customers will enjoy the same consumer protections afforded by the code as are available to customers of other telecommunications providers,’ said Chris Chapman, Chairman of the ACMA.
‘The ACMA will use its regulatory powers whenever necessary to enforce compliance with codes registered under Part 6 of the Telecommunications Act 1997, as well as those obligations established by the legislation that governs the industry’.
Web Ace also failed to respond satisfactorily to customer complaints, either by not responding at all or by making promises which it did not keep. Therefore the ACMA directed Web Ace to also comply with complaint handling requirements of the code, which requires that complaints be handled systematically and effectively.
Media contact: Donald Robertson, Media Manager, (02) 9334 7980.
Backgrounder
The ACMA has power under section 121 of the Telecommunications Act 1997 to direct a provider to comply with an industry code. Failure to comply with a direction made under section 121 of the Act may incur civil penalties.
C628:2007 Telecommunications Consumer Protections Code was developed by an industry body and covers matters which relate to telecommunications activities. The ACMA has directed Jason Kenneth McKay (trading as Web Ace) to comply with requirements of Chapter 6 (billing) and Chapter 9 (complaint handling) of the code.
The code, which is registered under section 117 of the Telecommunications Act, provides important protections to consumers in areas such as billing, credit management, complaint handling, customer transfer, consumer contracts and advertising of products and services.
Registered industry codes bind industry participants to agreed processes and behaviours that should result in improvements in consumer’s experience with the telecommunications industry.
The ACMA will take all steps necessary to ensure that consumers receive appropriate and adequate protection and that industry participants are meeting their obligations.
The ACMA’s approach to compliance and enforcement involves a graduated use of regulatory measures focused on using the appropriate power or intervention necessary to achieve the desired result.
The ACMA retains the discretion to consider more serious matters on a case by case basis at escalated categories within its approach to compliance and enforcement issues, where it makes the assessment that this is the appropriate action under the circumstances.
