ALT TV settles with Commerce Commission

26 November 2007

ALT TV settles with Commerce Commission over text and competitions

ALT TV, an independently owned television station based in Auckland, has settled with the Commerce Commission and agreed that not disclosing the cost of text messages, and misleading viewers over the nature of a prize offered in a competition, may have contravened sections 11 and 17 of the Fair Trading Act.

ALT TV promoted the use of a premium text message service for viewers to vote in polls, enter competitions, request music videos and to generally interact with their presenters. They did not inform viewers that the cost of sending a text message generated a charge of 99 cents per message, which is higher than the cost of sending a normal text message.

ALT TV also ran a competition where viewers could text the word ‘winner’ to enter a draw to win $10,000. However the actual prize offered by ALT TV was an Instant Kiwi Ticket, costing $1, with a potential prize of $10,000.

Commerce Commission Chair Paula Rebstock says “An increasing number of organisations use texting as a means of promoting to, and communicating with consumers. Organisations that encourage people to interact with them by text need to ensure that consumers are aware of all associated costs of sending texts. It doesn’t matter whether the organisation is big or small, the rules remain the same”.

“Many companies use competitions to promote themselves. Gifts and prizes must always be described accurately, and the description must not mislead people into thinking that what they stand to gain or win, or their chance of winning, is better than it actually is. It is not acceptable that ALT TV led people to believe that they were entering a draw to win $10,000 when in fact they were spending 99 cents for the possibility of winning a $1 lottery ticket.”

In settling with the Commission, ALT TV has agreed that all costs of using premium texts to interact with ALT TV will be made clear on screen, by the presenters and on ALT TV’s website. They also agreed to ensure that the promotion of any future competitions must meet the requirements of the Fair Trading Act and will not be misleading in any way and the description of the prize offered will match that which is intended to be provided.

Background

ALT TV is an independently owned television station based in Auckland broadcasting nationwide on SKY digital channel 65. ALT TV has been broadcasting since December 2005.

ALT TV is predominantly a music television station playing a variety of music videos. The station is mainly staffed by volunteer presenters representing different musical genres. The majority of directors and producers are also volunteers.

The cost of the premium text message service using the shortcode was not disclosed by ALT TV between at least May 2007 and 16 October. Between March and September 2007 the competition to win $10,000 was run on most Friday nights on the electronica/dance show The Playhouse.

Section 11 of the Fair Trading Act 1986 prohibits any person, in trade, from engaging in conduct that is liable to mislead the public in relation to, among other things, the characteristics of services. “Characteristics” of services can include price and omitting to disclose relevant information can be engaging in conduct for the purposes of the Act.

Section 17(a) of the Fair Trading Act 1986 says that no person shall offer gifts, prizes or other free items with the intention of not providing them or of not providing them as offered.

The Commission can take a range of enforcement actions against breaches of the Fair Trading Act including issuing a warning, entering into a settlement on the basis of undertakings or taking court action either through the criminal or civil jurisdictions. Only the courts can decide if a representation has breached the Fair Trading Act.

Breaches of the Act can result in prosecution; companies may be fined up to $200,000 and individuals up to $60,000.

ENDS

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