Telstra Joins ‘Dodgy Companies Club’ After Massive $10m Fine
Telstra has been given a seat at the ‘dodgy companies club’ after being ordered by the federal court to cough up a whopping $10m for making false or misleading representations to 100,000 customers in relation to third-party billing service, premium direct billing (PDB).
Telstra was found guilty overnight by the federal court.
The court held Telstra misled its customers and breached the ASIC Act when charging them for digital content such as games or ringtones, which they unknowingly purchased. Telstra also made it hard for its customers to opt out of the service.
The court found that in 2015 and 2016, Telstra did not adequately inform customers it had set the PDB service as a default on their mobile accounts. If customers accessed content through this service, even unintentionally, they were billed directly by Telstra.
This decision came after action by the ACCC with the consumer watchdog claiming Telstra had failed to install the ‘right safeguards in place for customers’.
Rod Sims, chairman at the ACCC says thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity.
He says, “By introducing and operating the Premium Direct Billing service, Telstra generated substantial profits by exposing customers to unauthorised charges.
“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone. The $10 million penalty imposed by the Court recognises the seriousness of Telstra’s conduct. In the ACCC’s view, such conduct falls below community expectations for appropriate corporate behaviour.”
Telstra will be refunded affected customers, it has already forked out $5m worth of refunds. The telco will also be reviewing any future complaints because of this action and deal with customers in ‘good faith’.
The ACCC is estimating further refunds could be worth several million dollars.
The ACCC is also reviewing other third party billing services offered by carriers making sure this is not a trend within the sector.