Telstra agreed to pay AUD50 million ($36.8 million) in penalties for breaching Australian consumer law by using exploitative tactics when selling post-paid plans to indigenous consumers.
The Australian Competition and Consumer Commission (ACCC) initiated a court proceeding against Telstra, which it said had admitted acting “unconscionably” when sales staff at five stores signed up 108 indigenous customers to multiple contracts they did not understand and could not afford between January 2016 and August 2018.
In joint submissions filed in federal court, the operator said it supported penalties totalling AUD50 billion, though it is up to the court to decide on an appropriate sum.
ACCC chair Rod Sims said the case “exposes extremely serious conduct which exploited” the vulnerabilities of indigenous consumers. He noted the operator “failed to act quickly enough” to stop the practices, resulting in “serious and avoidable financial hardship” for customers.
The competition regulator noted in some instances staff manipulated credit scores, so consumers who may have failed its credit assessment could enter into post-paid mobile contracts. The average debt per consumer was more than AUD7,400.
In its statement, the ACCC explained Telstra’s board and senior executives were unaware of the improper sales practices, and the operator acknowledged it had no effective systems in place to detect or prevent it.
It added Telstra has since taken steps to waive the debts, provide refunds and implement steps to reduce the risk of similar practices in the future.
Earlier this month, the Australian Communications and Media Authority warned the operator to comply with billing accuracy obligations after finding it overcharged nearly 10,500 customers AUD2.4 million over a 12-year period.Subscribe to our daily newsletter Back