Telstra fined $50m for ‘unconscionable’ sales to Indigenous customers

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Telstra is heading to court – and facing $50 million in fines – after admitting to breaches of consumer law that saw over one hundred Indigenous customers signed to unaffordable phone plans.

The Australian Competition and Consumer Commission (ACCC) has confirmed that it has begun Federal Court proceedings against the telco, in response to ‘unconscionable’ sales made between January 2016 and August 2018. The ACCC states that staff at five Telstra-licensed stores across the Northern Territory, South Australia and Western Australia used unfair selling tactics to sign Indigenous customers to postpaid mobile plans, causing distress and hardship when those customers were unable to keep up with their mobile bills.

108 Indigenous customers were impacted by improper sales practices over the almost two-year period. According to the ACCC, many of the affected customers did not speak English as a first language and had difficulties understanding the written contracts provided by Telstra. Some of these customers were also on a limited income, unemployed, or relying on government benefits or pensions.

The ACCC has stated that sales staff ‘took advantage of a substantially stronger bargaining position’ and did not provide full explanations of contract terms, or of the financial risk to affected customers. Staff also falsely claimed that products were ‘free’, and falsified information on credit assessments to ensure customers would be approved for a postpaid mobile service.

As many Indigenous customers lived in remote areas with only Telstra coverage available, it’s unlikely they felt in a position to negotiate, shop around, or question the information provided by sales staff. While the ACCC has acknowledged that Telstra’s senior executives and board members were unaware of the conduct of individual sellers operating Telstra-branded stores, the Commission believes that the telco could have acted sooner to assist customers.

“This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers,” said ACCC Chair Rod Sims. “Even though Telstra became increasingly aware of elements of the improper practices by sales staff at Telstra licensed stores over time, it failed to act quickly enough to stop it, and these practices continued and caused further, serious and avoidable financial hardship to Indigenous consumers.”

Telstra hit with $50 million penalty

Telstra has agreed to pay penalties totalling $50 million, subject to a Federal Court decision. The telco has also waived debts incurred by the impacted Indigenous customers – which came to an average of $7,400 per customer, and in one case more than $19,000  – and has taken accountability for the conduct of offending sales staff, including independent licensees selling Telstra products.

“I have spoken often about doing business responsibly including about these failings since earlier this year. I am determined we have a leadership position and hold ourselves accountable in this regard,” stated Telstra CEO Andy Penn in a statement.

“While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not OK. We have taken steps to provide full refunds with interest, waived debts and allowed most customers to keep their devices to help make things right.”

Alongside a hefty $50 million fee, Telstra has also agreed to additional remedies recommended by the ACCC, including improvements to its Indigenous services and digital literacy programs in remote areas, and updates to its compliance program.

Mr Penn has also confirmed that Telstra has begun working with community representatives and financial counsellors in impacted areas, and will introduce a new call centre in the Northern Territory specifically to assist Indigenous customers.

While Telstra is making efforts to remedy the damage caused by a handful of licensees, the ACCC is warning businesses that similar breaches of consumer law won’t be tolerated.

Avoiding bill shock & finding help with hardship

Postpaid plans are a common source of frustration for many Australians, and Telstra isn’t the first telco to be singled out for pushy practices or confusing contracts. Facing a monthly bill, rather than paying in advance, can leave you open to ‘bill shock’ on most mobile plans – so it’s important to get an idea of the overage fees and hidden charges that may apply to your contract before you sign up.

In addition to your mobile plan price, you may also be paying for a new device in monthly installments, so make sure you know the total monthly cost of both your phone and plan before your first bill arrives. Other unexpected charges include data overage fees (usually around $10 per excess gigabyte), international costs (such as calls, texts, and overseas roaming if not included in your plan), and non-standard calls, such as premium or satellite numbers.

You don’t need to spend a fortune to find a great everyday plan with plenty of data, especially if you don’t want a lock-in contract or you’re bringing your own smartphone. If you’re currently on a postpaid plan and are finding it hard to meet your monthly payments, all of the big telcos offer financial hardship options for mobile and broadband customers that may help ease the pressure during tough times.

Telstra

Telstra allows customers to request payment extensions for personal accounts, such as phone and internet. It offers personalised payment and service options through its Financial Hardship Policy, including fee waivers, flexible payment arrangements, and transfer of services to a more appropriate product.

To apply for assistance, contact Telstra on 13 22 00.

Optus

Like Telstra, Optus gives customers the option to request an extension on bill payments, and you can apply through the My Optus app’s ‘Billing’ services or by texting the word Menu to 9999.

Optus also offers Financial Hardship Assistance to eligible customers. Depending on your circumstances, you may be granted fee waivers, a plan review, a temporary hold on your account, or other options. You can apply via the My Optus App or by calling 1800 120 698.

Vodafone

Vodafone currently offers a long term financial assistance option for any customers experiencing hardship. Customers are encouraged to call Vodafone on 1800 185 289, or email financial.hardship@vodafone.com.au to apply or to request further information.

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