Spark warned by commission, refunds thousands of broadband customers

Ōtautahi - Spark New Zealand has been warned by the Commerce Commission and has refunded nearly 113,000 customers after some were charged for a wire maintenance service they did not need (or could not use or benefit from). 

The Commission began investigating Spark in 2020 following a consumer complaint. Spark has provided the commission with enforceable undertakings in which it committed to refunding all affected customers.

It has already refunded around $15 million to customers with a remaining $348,757 still to be refunded to 4921 customers. 

Between 2014 and early 2021, Spark charged more than 400 wireless broadband customers and around 112,600 fibre connection customers for the wire maintenance service, even though most would have no need for it.

Spark collected around $15.7 million in fees for the service from those customers over the six-year period. 

Customers must be able to rely on information businesses provide to them when they are buying, contracting or being invoiced for services.

Businesses should not be charging customers for services that they don’t need or have no use for, or services that they cannot practically benefit from. If extra services or costs are charged, businesses must ensure that information about them is clearly disclosed to customers and is accurate, complete and easy to understand.

Spark has since stopped selling the service to wireless and fibre connection customers. It is in the process of voluntarily refunding all wire maintenance service fees paid by customers with wireless and fibre broadband connections and is putting system fixes and processes in place to prevent the wire maintenance service being offered to these customers in the future.   

Spark has been investigated a number of times for potential breaches of the Fair Trading Act.

In 2019, it was prosecuted and fined $675,000 for making false or misleading representations in its customer invoicing and when making a $100 credit offer to new customers.  

It was also warned three times in that same year for misleading in-contract customers about a broadband price increase, making unsubstantiated representations about the speeds consumers would receive from portable Wi-Fi devices and false representations about the price of sim cards, and failing to correctly apply a $300 welcome credit to the accounts of eligible customers.