Zen Telecom has been slapped with a $225,000 fine from the Federal Court after the Australian Competition and Consumer Commission pursued Zen for misrepresenting itself to clients.
According to the ACCC the company had been cold-calling potential clients and telling them it were affiliated with Telstra, when in fact it was not.
The fraudulent calls were made between September 2012 and August 2013 and the court also found a number of other breaches of Australian Consumer Law.
These were: not providing a copy of the contract within five business days; not providing a notice to cancel the contract; not providing an agreement with Zen's address and cooling off rights and; failing to supply services to consumers during a 10-day cooling off period.
The ACCC also said while the initial marketing cold-call in which Zen promoted an affiliation with Telstra was not recorded, a subsequent call to negotiate an agreement was.
"The ACCC was concerned that by the time consumers progressed to the second stage of the call where they agreed to acquire services from Zen Telecom, they had already been misled by misrepresentations of an association or affiliation with Telstra which had been made during the marketing part of the call," ACCC Commissioner Sarah Court said.
As part of the court order, Zen will be required to publish corrective notices on its website and in daily papers across Australia.
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