- The Advertising Appeals Committee found that MTN’s “free-to-use” router claim was misleading, as some consumers may be charged a SIM activation fee before using the router.
- The Committee determined that activation charges form part of the real cost of using the router and must be clearly disclosed in advertising.
- MTN has been ordered to remove or amend all “free-to-use” claims to alert consumers to possible additional costs.
The Advertising Appeals Committee has dismissed Mobile Telephone Networks (Proprietary) Limited’s appeal, confirming that its “free-to-use” router advertising for the Shesh@600 Home Internet package breached the Code of Advertising Practice by failing to disclose potential activation-related costs.
In its ruling, the Committee found that MTN’s unqualified “free-to-use” claim created a misleading impression, particularly for consumers signing up in-store who may be required to pay a SIM activation fee before using the router.
The appeal stemmed from a complaint by a consumer who subscribed to MTN’s Shesh@600 5G/LTE Home Internet package, offering uncapped data with tiered speeds for R399 per month. The promotion, seen in a MyBroadband advertorial and on MTN’s website, prominently advertised a “FREE to use router”.
While the Directorate had previously accepted MTN’s explanations on VAT pricing and pro-rata billing, it partially upheld the complaint regarding the “free-to-use” router claim, finding that omitting information about possible additional charges was misleading.
MTN appealed this finding, arguing that the router was genuinely free and that the complainant had not been charged any activation fee.
The appeal and MTN’s defence
At the appeal hearing, MTN, represented by its General Manager: Commercial Legal, Mr Dursen, accepted that clauses 4.2.1 and 4.4 of Section II of the Code applied. He argued that the Directorate’s decision was “factually and materially wrong” and that no charge had been levied for the router or its activation in the complainant’s case.
MTN presented invoices showing the router was listed with a zero charge and confirmed that no SIM activation fee had been applied to the complainant’s account.
“The complainant was billed only for the subscription price and pro-rata charges,” MTN submitted, adding: “the ‘free-to-use’ router appears with a charge of zero.”
However, in its written submissions, MTN acknowledged that its authorised dealers may charge a SIM activation fee of up to R150 for in-store sign-ups. Clause 5.5 of the applicable terms and conditions expressly states that MTN “reserves the right to charge a SIM activation fee.”
When questioned by the Committee, MTN confirmed in a post-hearing letter that the fee is charged by dealers at the point of sale as an administration charge and does not appear on MTN’s billing invoice.
Why the “free-to-use” claim failed
Although the Committee accepted that the complainant had not been charged a SIM activation fee, it emphasised that the central issue was whether the advertising was misleading to the broader class of consumers, not just to one individual.
“The question before us is not whether this particular complainant was charged in a particular way,” the Committee stated. “It is whether the advertising contravenes the Code.”
The Committee found that the Shesh@600 campaign targets at least two categories of consumers: those who subscribe online, who may avoid any activation fee, and those who sign up in-store, who may be required to pay a once-off SIM activation fee of up to R150 before using the router.
Rejecting MTN’s attempt to separate the SIM from the router, the Committee held that a reasonable consumer would see activation as part of the cost of using the device.
“The router is supplied with a SIM card and cannot function on MTN’s network without that SIM being activated,” the Committee said. “A once-off SIM activation fee payable as a condition for activating the SIM that comes with the router is, in economic terms, part of the cost of using the router.”
The Committee also criticised MTN’s reliance on general “Ts & Cs apply” links, noting that consumers were not directed to any clause explaining the nature or amount of the activation fee.
“In our view, a reasonable consumer is not expected to search through layers of online terms to discover that a ‘free-to-use’ router may carry an activation-related cost,” the ruling stated.
Advertising must disclose real costs
Applying clause 4.4 of the Code, the Committee emphasised that products may not be described as “free” where there is any cost to the consumer other than genuine delivery or postage charges.
“A SIM activation fee of up to R150 payable at the point of sale is not a delivery charge,” the Committee found. “It is a charge associated with enabling the service and, by extension, the router.”
The Committee rejected MTN’s argument that disclosure at the point of sale was sufficient. “At that stage, the ‘free-to-use’ claim will already have played its role in attracting the consumer,” it said. “The Code requires us to consider whether the advertising itself is likely to mislead.”
For these reasons, the appeal was dismissed and the Directorate’s sanction upheld.
MTN ordered to amend advertising
The ruling confirms that MTN must now remove or appropriately amend all “free-to-use” claims associated with its router so that prospective customers are clearly alerted to any additional activation cost that may be payable.
Although the Committee accepted that the complainant suffered no financial prejudice, it held that the structure of the offer and the unqualified “free-to-use” claim rendered the advertising misleading.
“The existence of a SIM activation fee that may be charged to some consumers, without a clear and prominent qualification in the advertising, means that the router cannot be described as ‘free-to-use’ within the meaning of the Code,” the Committee concluded.
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