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Published 11 April 2013 07:26, Updated 18 April 2013 00:45
Whoever wins the court case, Ruslan Kogan will be the one that needs to manage the damage done to his brand in the eyes of customers. Photo: Luis Ascui
In 2010, Ruslan Kogan, one of Australia’s shrewdest marketing types, made a comment about risks to his business in the age of internet-based commerce.
“Being an online retailer essentially gives each and every one of your customers a megaphone,” Kogan said in an interview with BRW.
On Wednesday the very same Ruslan Kogan was doing his best in the Victorian Supreme Court to quieten those megaphones. They started blaring last month when Kogan Mobile users started finding their accounts suspended. As customers like Queensland pensioner ‘Mean Dean’ wrote on the Whirlpool discussion forum, they found themselves prevented from recharging their prepaid accounts.
“[M]y credit just ran out today so i went to top up again for another month and it would not allow me,” Mean Dean wrote on the discussion site. “They looked into my account and told me i couldn’t recharge because i made to many phone calls and sms i couldn’t understand what they were on about and asked the how can i make to many calls on a unlimited account ? they just kept saying i could.”
For a businessman whose eponymous online business has propelled him into the top ranks of BRW’s Young Rich list, in eighth place with a fortune of $145 million last year, the megaphone Mean Dean and hundreds of other users had to blow was just what he warned against three years ago.
“We can’t afford for someone to go to Google and type ‘Kogan review’ and to read bad things about us,” Kogan said.
Hence the application for an urgent injunction against Kogan Mobile’s wholesale provider, ispONE, which had been turning off the accounts of customers it deemed to have been using the service excessively. Whatever the eventual finding of the court in a case that is due to go to trial next week, more damage is being done to Kogan’s name than to ispONE’s. The Melbourne-based mobile service wholesaler is arguably less at risk of damage from the court of public opinion than Kogan, whose own maverick brand is part of the package along with the flatscreen TVs and mobile phones.
Kogan, who has seemingly never met a publicity opportunity he didn’t like, was uncharacteristically quiet in Court 3 of Melbourne’s Old High Court building on Wednesday. Given an opportunity to comment, a besuited Kogan – in contrast to his usual T-shirt and baseball cap get-up – cheerfully declined.
He did show a relieved look at the end of the hearing, when Justice James Judd granted an injunction requiring ispONE to lift the suspension of Mean Dean’s and the 600-odd other accounts for a week. The injunction also – crucially for Kogan – prevented ispONE from suspending another 2000 prepaid accounts it was planning to suspend as their balance reached zero.
While 2600 accounts is still less than 5 per cent of the total 56,000 customers Kogan Mobile was revealed in court to have, Kogan would have had a great many more Mean Deans on his case.
The trial next week will revolve around definitions of what constitutes excessive use, as well as the wholesale agreement between Kogan Mobile and ispONE, and whether ispONE is permitted to take the action it took against Kogan Mobile’s customers, although it has no formal relationship with them. ispONE’s only relationship in this case is with Kogan Mobile.
Still, whatever the outcome, the brand damage and mitigation will be Kogan’s to manage. His customers are the unhappy people who feel they have not been given the ‘unlimited’ service they thought they were signing up to. And while ispONE may find that the injunction it was hit with yesterday may turn into a more permanent state of affairs, Kogan may also have to change his tune.
Technology lawyer Peter Moon last month said he thought Kogan Mobile’s Acceptable Use Policy, the fine print section for customers, was illegal and breached both the telco regulator’s Telecommunications Consumer Protections code and Australian Consumer Law in multiple ways, the Age reported.
Mean Dean didn’t appear to be in court on Wednesday. He may have been, but there certainly weren’t 600 aggrieved Kogan Mobile customers. And this was a point the judge remarked upon. The case is between two companies, but the unhappiness is on the part of consumers.
“The problem seems to me to be one where you have people out there who are end users who may have a real grievance about their compliance with the Acceptable Use Policy… and how is that to be adjudicated?” Judd said. “[T]hey’re the people that in the end seem to be of paramount importance in this dispute and they’re not represented here.”
But they’ll have their day. If not in Court 3, then in the court of public opinion. And with megaphones.