Lessons from ACCC v Telstra 5 min read
On 21 February 2025, the Federal Court of Australia (the Court) handed down its decision in Australian Competition and Consumer Commission v Telstra Limited [2025] FCA 93. The Court found Telstra misled nearly 9000 customers via its Belong broadband service by failing to inform them of a reduction to the maximum upload speed on their internet plans.
The decision is a reminder that not informing customers about changes to a material feature of a product or service can be considered misleading or deceptive under the Australian Consumer Law (ACL), if the circumstances create a reasonable expectation that the service remains unchanged.
In this Insight, we explore the decision and its implications for businesses in Australia.
Key takeaways
- Failure to notify customers about a material change to a product or service can amount to a false or misleading representation, or misleading or deceptive conduct under the ACL. This is especially the case where the product or service continues to be marketed, invoiced and administered in the same manner, creating a reasonable expectation amongst consumers that the product or service is the same in all material aspects as it has always been.
- Businesses should be proactive in notifying customers in a timely manner of changes that impact the value or performance of their service to mitigate regulatory and reputational risks.
ACCC allegations
The Australian Competition and Consumer Commission (ACCC) alleged that Telstra, operating the Belong brand, contravened the ACL by changing the upload speed of its 'Premium' NBN plan from 40Mbps to 20Mbps in late 2020 without notifying affected customers.
The ACCC's case focussed on two classes of customers who purchased the 'Premium' plan prior to being migrated to a slower 20Mbps plan without being notified:
- Cohort A, being 2785 customers who originally signed up to the 'Premium' plan when it was expressly advertised in published materials as including 40Mbps upload speeds. These customers were informed of the change retrospectively in 2021 and 2023; and
- Cohort B, being 6112 customers who signed up for the 'Premium' plan after Belong had stopped specifying an upload speed in its published materials, referring only to the plan as 'Premium'.
For both cohorts, the ACCC alleged that Telstra engaged in misleading or deceptive conduct and made false or misleading representations to customers that the service they were receiving was the same as what they had originally signed up for, when it was not.
Telstra admitted to having misled Cohort A customers but denied making any misleading representations to Cohort B customers.
The Court's findings
The Court found that Telstra contravened the ACL by unilaterally migrating its customers to a different plan without notifying them. In respect of Cohort A customers, the Court found this conduct contravened sections 18, 29(1)(b) and 29(1)(g) of the ACL.
In respect of Cohort B customers, the Court found this conduct contravened sections 18 and 29(1)(g) (false and misleading representations surrounding the performance characteristics of a good or service) but did not amount to a contravention of section 29(1)(b) (false and misleading representations surrounding the particular standard, quality, value or grade of a service).
Cohort A customers
In respect of Cohort A customers, the Court found that Telstra represented to consumers that the 'Premium' plan maintained the same upload speed capabilities after the migration as it did before. This representation arose because customers had a reasonable expectation that they would be notified of any detrimental changes to their service—an expectation created by Belong's silence contextualised by the published assertions about the plan's characteristics (including explicit references to the plan possessing maximum upload speeds of 40Mbps) and the ongoing administration of the service as if nothing had changed.
In these circumstances, the Court held that on and from the date of the migration, and until Belong corrected the representations in 2021 and 2023, Telstra's silence amounted to misleading or deceptive conduct for the purposes of section 18 of the ACL, and constituted a false and misleading statement regarding the standard of the service and the service's performance characteristics, amounting to contraventions of sections 29(1)(b) and 29(1)(g) respectively.
Cohort B customers
In the case of Cohort B customers, Telstra denied it made any false or misleading representations to consumers. While Belong did not expressly state the maximum upload speed to these customers at the time of purchase, the ACCC alleged that Telstra nevertheless represented to consumers that their service was the same as it was at the time of purchase. This representation was said to be created by Telstra's silence contextualised by Belong's terms and conditions (which provided that Belong could migrate customers to alternative services provided 'reasonable notice' was given to customers) (Terms and Conditions Conduct), the continued marketing of the plan as a 'Premium' plan (Marketing Conduct), and the continued invoicing of the 'Premium' plan (Invoicing Conduct).
The Court found that the upload speed was 'sufficiently critical' to the character of an NBN plan that customers would reasonably expect to be advised of a detrimental change to it. The Court also considered that Telstra's silence combined with the Marketing Conduct and Invoicing conduct, created a representation that a consumer's service had not changed in any material respect (including upload speed). It followed that, by failing to notify customers of their migration to plans with slower upload speeds, Telstra falsely represented to customers that their plans continued to have the same maximum upload speeds as they always had, when in fact they did not. In reaching this conclusion, the Court considered various combinations of Telstra's Terms and Conditions Conduct, Marketing Conduct, Invoicing Conduct and silence to identify which combinations had the effect of creating a false representation.
Ultimately, the Court found that Telstra engaged in misleading or deceptive conduct for the purposes of section 18 of the ACL, and made a false and misleading statement regarding the service's performance characteristics in contravention of section 29(1)(g). Telstra was not found to have contravened section 29(1)(b), as Belong did not represent the particular standard of the service, only that the service continued to provide the same upload speeds as at the time of purchase.
What this means for businesses in Australia
This case highlights the critical importance of transparency and clear communication with consumers.
Businesses must ensure that any changes to their service terms, especially changes that could be perceived as detrimental, are clearly and proactively communicated to customers. This is particularly the case where the change relates to a term which is material to the service, such that customers would reasonably expect to be notified of any change.