Vodafone faces multi-million dollar class action claim

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Vodafone faces multi-million dollar class action claim

Peak telco body warns customers not to join.

The law firm behind the class action levelled at Vodafone wants a damages award in the “tens of millions” of dollars.

Piper Alderman yesterday announced its intention to end two years of investigation by launching a class action lawsuit against Vodafone by the end of May.

The lawsuit was first floated in December 2010 in reaction to the mass ‘Vodafail’ movement which highlighted issues such as poor service, reception issues and lack of value with Vodafone’s mobile network.

At the time, Piper Alderman said it had around 20,000 people interested in a class action lawsuit.

However, it said today that it had no formal registrations yet due to a change in its sign-up process.

It has created a new website and is encouraging disaffected users to formally register for the lawsuit.

Piper Alderman said it expected around 23,000 people to sign up.

Piper Alderman partner Sasha Ivantsoff said the firm had secured funding from litigation funding company LCM, and expected damages to reach tens of millions of dollars.

LCM prefers to undertake projects in which the legal claim exceeds $2.5 million, according to its website. It charges between 35 and 50 percent of the amount recovered from the claim. 

Piper Alderman said it would not seek punitive damages.

'No point' talking to Vodafone

Ivantsoff said the firm had not approached Vodafone to broker an out-of-court resolution because it did not currently have enough evidence to prove customer losses. 

“If I was acting for Vodafone my first question would be ‘prove your loss’. Until we can give something to them there doesn’t seem a lot of utility speaking to them,” he said. 

“We need to have something meaningful to put to them. How many people are in the class, how much each person’s losses are going to be, and we can’t do that until we’ve got people to sign up."

He did not specify when the law firm would have enough concrete customer data to take to Vodafone.

Over the past two years, the law firm has investigated the merits of customer claims, while LCM has done its own due dilligence, Ivantsoff said. 

He said the prospect of the class action lawsuit commencing was quite likely, but did not provide a threshold for how many disaffected customers would be needed for the lawsuit to go ahead. 

Piper Alderman currently has around four other unrelated class actions on its books.

Vodafone did not respond to request for comment by the time of publication. It said yesterday the law firm was known for "promoting class actions". 

"That firm has not contacted Vodafone directly about this since it first threatened action in 2010, nor has it sought to discuss the claims of any customers it represents in the class action with Vodafone." 

"Lawyer's picnic"

Telecommunications consumer group ACCAN is urging customers to contact the Telecommunications Industry Ombudsman (TIO) rather than back the class action, calling it lengthy and likely to fail.

A spokesperson said there was no denying Vodafone’s history with network problems and subsequent mass customer revolt, but said the telco had worked to compensate customers while those dissatisfied with its response had “voted with their feet”.

“This class action is going to take a long time to play out and there are no guarantees for consumers that they will receive compensation if it goes to court – our fears are that this will turn into a lawyer’s picnic," ACCAN said.

“It would be a better outcome for consumers if VHA was able to invest the money it will spend defending this class action into further improving its network, which would result in a better service for its customers."

ACCAN expressed concerns the class action may force Vodafone to exit the local market, leaving consumers with a duopoly. 

“We don’t think this will be a good outcome for Australian consumers. Vodafone have always provided strong competition in the mobile market and we need them to continue to do so".

Vodafone Hutchison Australia revealed last night it had lost 443,000 customers last year. Its customer base fell to 6.6 million, with a 16.8 percent drop in customer service revenue.

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