Telstra fined $50m over sales tactics

 

Australia's major telecommunications provider Telstra has been taken to court for admitting it aggressively sold mobile phone plans to vulnerable Indigenous communities.

On Thursday morning, the Australian Competition and Consumer Commission confirmed it had taken legal action against the telco provider in the Federal Court following Telstra's admittance of lobbing high cost mobile phone plans on Aboriginal people.

Telstra has admitted to breaching Australian Consumer Law between 2016 and 2018 after employees took advantage of 108 Indigenous customers and signed them up to multiple mobile phone plans without conducting credit checks or properly explaining terms and conditions.

Telstra has accepted a $50 million fine, to be confirmed by the court.

ACCC chair Rod Sims says Telstra's wrongdoing caused severe personal financial hardship and ongoing distress for a number indigenous communities.

"These debts significantly impacted the affected individuals," Mr Sims said.

"For example, one consumer had a debt of over $19,000; another experienced extreme anxiety worrying they would go to jail if they didn't pay; and yet another used money withdrawn from their superannuation towards paying their Telstra debt."

Telstra CEO Andy Penn at their HQ in Melbourne. Picture: Aaron Francis/ The Australian
Telstra CEO Andy Penn at their HQ in Melbourne. Picture: Aaron Francis/ The Australian

 

Telstra confessed that the five stores located in the Northern Territory, Western Australia and

South Australia used unfair selling tactics and took advantage of their bargaining position to sell products onto people whose first language may not have been English.

The ACCC said Telstra's actions resulted in the customers incurring an average debt amount of $7400. Some cases were also referred onto third party debt collectors.

"In many instances, sales staff also manipulated credit assessments so consumers who otherwise may have failed its credit assessment could enter into postpaid mobile contracts. This included falsely indicating that a consumer was employed," the ACCC said in a statement.

Mr Sims said despite Telstra becoming aware of these issues, it failed to act swiftly in rectifying the problem.

"This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers," Mr Sims said.

"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 board and senior management were unaware at the time of the serious misconduct by some of its retail staff.

The company has agreed to the filing of consent orders and joint submission of a $50 million fine, which will be decided by the court.

 

Originally published as Telstra taken to court over selling tactics


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