One NZ, formerly known as Vodafone, has been handed a record $3.675 million fine for misleading consumers in the marketing of its FibreX broadband service.

The penalty is the largest handed down by a court under the Fair Trading Act.

Commerce Commission chair John Small said it was a “significant win for Kiwi consumers”.

”Every New Zealander should be able to trust what businesses are saying in their marketing and promotion of their services.”

One NZ was found by the Auckland District Court in 2021 to have misled consumers into believing its FibreX service was fibre-to-the-home broadband, when it was not. It was also found to have been falsely suggesting to consumers that FibreX was the only available broadband service at their address, which was not true.

The company was sentenced in April 2022 on 18 representative charges under the Fair Trading Act relating to conduct in Wellington, Kapiti and Christchurch, where its FibreX-branded service was offered, between October 26, 2016, and March 28, 2018. It was fined $2.25m.

That was appealed by the commission, which argued it was “manifestly inadequate” and did not appropriately reflect the seriousness of the offending, and the size and financial resources of the business.

The High Court rejected One NZ’s appeal against the sentence and conviction and backed the commission’s view.

The promotion of FibreX denied consumers the ability to make an informed choice about the most appropriate broadband option for their needs, the commission said.

“By misleading consumers into believing FibreX was fibre-to-the-home, One NZ distorted competition by giving itself an unfair advantage over its competitors who were selling true ‘fibre’, including local fibre companies and other retailers,” Small said.

Small said the new record fine reflected the seriousness of the company’s conduct and would “serve as a strong deterrent to other large businesses”.

One NZ has a long history with the Commerce Commission, which spans back to 2011, when it was fined $81,900 for breaching the Fair Trading Act in relation to its $1-a-day mobile phone internet data charges promotion.

In 2019 it was fined $350,000 for making false representations in invoices it sent to customers after it pleaded guilty and in July this year the commission issued a Stop Now Letter to One NZ for representations made in its campaign promoting “100% mobile coverage. Launching 2024”.