New Zealand Commerce Commission investigating Australian company

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Monday, January 15, 2007

The New Zealand Commerce Commission is investigating Australian-based lottery competition company, TMG Asia Pacific Pty Limited, under alleged breaches of the Fair Trading Act after quite a few text-based lottery competitions have been running on New Zealand television.

To enter the competitions, the entrants must answer a simple question and then text the answer to a special text number, 8555. The competitions are shown during advertisements on New Zealand television stations, and include possible prizes of televisions, game consoles, exercise equipment, and more.

The Commerce Commission said that they have received around 180 complaints regarding the text competitions and the charges they incur on their mobile phones. The charges are when a person texts the correct answer to 8555 they are agreeing to sign up to their subscription based services which charges them NZ$3 for each text message received. A maximum of $15 is charged a month unless the special keyword to stop receiving text messages: STOP is texted. The Commerce Commission said that the complaints reflect that the entrants do not know about the subscription, even though the advertisements briefly state in fine print that the competition is a subscription competition, how much a received text costs, etc at the bottom of the ad.

An employee of TMG Asia Pacific Pty Limited questioned about the subscription charges claimed that the majority of the charge for each text message sent to competition entrants goes to Telecom New Zealand, and a fraction is paid to them.

The director of Fair Trading for the Commerce Commission, Deborah Battell, said: "[180 complaints] is an exceptionally high number of complaints for a single issue."

"The Commerce Commission is investigating whether the disclosure of the terms and conditions of these promotions was adequate," Ms Battell said.

In November of 2006 the Commerce Commission had contacted TMG Asia Pacific to discuss their concerns over their promotions. Ms Battell said: "The company has been made well aware of our concerns. The Commission has now asked the company to respond by 4pm, Thursday, 18 January 2007."