ACMA: Vodafone Breaches Verification Rules Before Activating Prepaid Mobile Services

Kehoe Law Firm is investigating claims on behalf Vodafone Group plc investors (NASDAQ:VOD) to determine whether Vodafone and certain of its officers or directors have engaged in securities fraud or other unlawful business practices.

On January 10, 2018, post-market, the Australian Communications and Media Authority (“ACMA)” announced that “Vodafone Network Pty Limited will significantly improve its processes for verifying the identity of prepaid mobile customers under an enforceable undertaking accepted by the Australian Communications and Media Authority,” subsequent to an investigation by the ACMA which disclosed that Vodafone “failed to verify the identity of at least 1,028 customers before activating their prepaid mobile services.” According to the ACMA media release, “[t]he breaches occurred between 6 January 2015 and 6 January 2016. They resulted from changes to Vodafone’s IT systems that allowed customers to self-select online that their identity had been verified in store, without any further check that this had actually occurred.”

The ACMA’s Final Investigation Report stated:

After completing its investigation, the ACMA finds that Vodafone Hutchison Australia Pty Limited [VHA] . . . has contravened section 2.3 of the Telecommunications (Service Provider – Identity Checks for Prepaid Mobile Carriage Services) Determination 2013 (the Prepaid Determination) on at least 1,028 occasions. As a consequence of these contraventions, the ACMA also finds that VHA contravened subsection 101(1) of the Telecommunications Act 1997 (the Act) on at least 1,028 occasions as it did not comply with the service provider rules that apply to it, namely the rules set out in the Prepaid Determination in force under section 99 of the Act. [Emphasis added]

Further, the ACMA report stated that “[i]n February 2016 the ACMA became aware of an option on VHA’s website which allowed customers of its prepaid mobile carriage services to select that their identity had been verified in a store and then proceed to activate their service through use of the website,” and “[t]he ACMA was concerned that the ID-checked in store option appeared to allow customers to activate their prepaid mobile carriage service using the website without VHA necessarily having checked the customer’s identity at the time of sale . . . of the service or at the time of activation as required by the Prepaid Determination.” [Emphasis added]

The ACMA’s Final Investigation Report referred to “ID-checked in store option” as the option which allowed VHA customers to self-select on VHA’s website that their identity had been verified in store followed by activation of their prepaid mobile carriage service.

On this news, Vodafone’s American Depositary Receipt price fell sharply during intraday trading on January 11, 2018.

Vodafone ADR Stock Chart

Vodafone ADR Investors

If you have questions or concerns about Kehoe Law Firm’s investigation, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].

Kehoe Law Firm, P.C.