Telcos slammed over security deposit demands

Telcos claimed $20 security deposit was necessary as not all customers were paying for service

The Australian Communications and Media Authority (ACMA) has directed two linked telcos, Vaya and Live Connected, to comply with the TCP Code after the service providers asked customers for a $20 security deposit in February.

The telcos contacted their existing customers by email and advised that they were imposing a one-off refundable security deposit of $20 per service and that the security deposit would be debited along with their next monthly bill.

The companies said it was necessary because some customers were using the service but not paying for it.

However, under the TCP Code, providers can only request a security deposit from a customer following a credit assessment.

Neither Vaya nor Live Connected had undertaken individual credit assessments of the affected consumers, the ACMA said.

“This finding sends an important message to the telco industry that security deposits cannot be unilaterally imposed on all customers,” said ACMA chairman Chris Chapman.

“Security deposits are different from other payments or pre-payments that may be requested of customers by suppliers when they first set up an account. The TCP Code defines them as a payment made by a customer to a supplier to mitigate a credit risk.”

The two telcos have agreed that they will not require a security deposit unless an individual credit assessment has been undertaken first.

In response, a Vaya spokesperson said that after working with ACMA, it had incorrectly named the new policy as a security deposit, instead of a prepayment.

"The introduction of this policy is a typical and common sense way to operate given the competitive nature of pricing in the industry but one that we failed to label correctly. We have made a technical mistake by using one approach and not the other," the spokesperson said.

"Of course, we're happy to adopt the term prepayment going forward, but the principle that service providers can offer plans with a payment advance is well known and accepted. Going forward, we will continue to work hard to provide quality services to our customers at the best possible price, which has been our mission since we launched and will continue to be."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags ACMAVayaLive Connected

More about Australian Communications and Media Authority

Show Comments