Telstra who has one of the highest complaint rates in Australia when it comes to communication and smartphones has been caught out yet again exploiting consumers, this time at one of their Telstra stores, now they are facing a $50M fine.
It was only last month that Telstra was telling the media that they were set to take back their store network due in part to their lack of ability to control customer service.
Now it’s been revealed in a Federal Court hearing that Telstra coached staff at a Darwin store to manipulate credit assessments and exploited Indigenous customers by signing them up to plans they could not afford.
Evidence was presented that outlined how one middle-aged woman, who spoke English as a second language and was living on a disability pension and caring for multiple children, was sold three separate contracts at once, collectively worth a minimum of $450 a month.
According to the ABC in Darwin the woman’s service was disconnected and the debt was passed on to third-party debt collectors, despite Telstra being told by a financial counsellor that the woman was homeless in October 2018.
In February 2019, the debt was waived, the consumer was refunded $14,000 and allowed to keep the devices after the Telecommunications Industry Ombudsman got involved.
The latest revelations of widespread exploitation of consumers by the national carrier is not the first time that Telstra has been caught out trying to manipulate a consumer sale so that sales executives got a bigger commission.
According to evidence before the court, the conduct continued even after an internal report found problems with sales to Indigenous consumers.
While Telstra said it became “progressively aware of the issues”, the Federal Court heard that sales commissions were clawed back but debt waivers for affected customers took more than a year to be considered in some cases according to the ABC.
As part of the credit manipulation process, Telstra staff listed one customer’s employer as Centrelink, even though the customer was receiving Centrelink benefits and did not actually work there.
Earlier this year Telstra reached an agreement with the Australian Competition and Consumer Commission (ACCC) after the watchdog completed an 18-month investigation into Telstra’s conduct.
Telstra agreed to pay a $50 million dollar fine after accepting that their practices were not acceptable, the Federal Court is deciding whether the orders sought are appropriate or whether the fine should be decreased or increased.
If imposed by the court, the penalties would be the second highest ever imposed under Australian consumer law.
While Telstra said it became “progressively aware of the issues”, the Federal Court heard that sales commissions were clawed back but debt waivers for affected customers took more than a year to be considered in some cases.
The court heard Telstra had to claw back tens of thousands of dollars in incentives paid to staff over five stores, who had received commissions to hit sales targets.
Some of those targets were achieved by staff selling post-paid plans to Indigenous Australians who could not afford them.
The Federal court was told that 108 customers across five stores in Darwin, Alice Springs, Broome, and Arndale in Adelaide were affected by the practices.
Telstra’s lawyer said the full extent of the complaints, including 48 complaints from Casuarina, was not immediately identified.
“In a responsible way we have cooperated to put the agreed facts in front of the court,” Telstra’s barrister Neil Young QC told the court.
“Our cooperation has extended to the fact we have already implemented full remediation.”
He said those measures, which included the introduction of a hotline, staff training, and the appointment of two Indigenous officers, were estimated to have cost $12 million.
The measures were the result of an enforceable undertaking brokered by the ACCC and Telstra’s lawyers and presented to the court.
Justice Mortimer has reserved her decision on the penalty until a date yet to be determined.
