An Australian telecommunications company created a phony debt collection company that engaged in "false, misleading and unconscionable conduct," including sending letters and operating a sham complaints hotline, according to the Federal Court of Australia.
Excite Mobile was found guilty Thursday of several forms of misleading conduct, that affected "a large number of consumers" across the country, including an unknown amount of West Australians and some members of remote Aboriginal communities, according to the Australian Competition and Consumer Commission (ACCC).
The ACCC launched an investigation against the company in December 2011. Federal Court Judge John Mansfield found there was nothing "sinister" about trying to address complaints internally, but that the company and three individuals - including directors Obie Brown and David Samuel - misled individuals by making representations that it's "Telecommunications Industry Complaints" hotline was independent from Excite, according to Australian online publication WAToday.com.
Excite Mobile also created a fake independent debt collector known as Jerry Hastings, using the name to write threatening letters to more than 1,000 customers, Judge Mansfield found.
"Jerry Hastings as used by Excite Mobile is, I find, a fictitious character and one created to be seen as separate from Excite Mobile," according to Judge Mansfield. "By creating and sending the Jerry Hastings letters, Excite Mobile engaged in conduct which was misleading, deceptive and likely to mislead and deceive."
The letters unnecessarily coerced customers and made false representations about the remedies available to them, Judge Mansfield concluded.
The remedies Excite claimed while pretending to be the debt collector included demands for 20% of the customers' original debt for late payment and the repossession of all assets, including children's toys.
Excite's mobile phone plans, which used the Optus Network, were initially flagged by the Indigenous Consumer Assistance Network.
Some customers, largely those in remote communities, were also falsely told they could get coverage at their home address, where there was no Optus network coverage available, the court heard. Judge Mansfield further found a $75 "cool-off" fee and a $195 charge for returning a phone if the box was damaged to be unconscionable or unfair.
Excite Mobile faces fines of up to $1.1M for each breach of trades legislation, an ACCC spokesperson said. The ACCC are seeking injunctions and pecuniary penalties, which would include orders Mr Brown and Mr Samuel be disqualified from managing a corporation for five years.
Excite Mobile's website appears to have been taken down.