by Byron Connolly

Telstra to pay $10M for misleading 10,000 customers

Apr 27, 2018
GovernmentMobileSmall and Medium Business

The Federal Court has ordered Telstra to pay a $10 million penalty for making false or misleading statements relate to its third-party billing service.

The fine follows action by the Australian Competition and Consumer Commission which found that the telco misled customers and breached the ASIC Act when it charged them for digital content such as games and ringtones which they unknowingly purchased.

The court found that in 2015 and 2016, Telstra did not adequately inform customers it had set the service as a default on their mobile accounts. If customers accessed content through this service, even unintentionally, they were billed directly by Telstra.

Telstra admitted that more than 10,000 customers of its third-party premium direct billing service may have been affected. The telco has ceased operating this service and said it would refund customers.

“Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity. By introducing the operating the premium direct billing service, Telstra generated substantial profits by exposing customers to unauthorised charges,” ACCC chairman Rod Sims said.

‘Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone. The $10 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,” Sims said.

Telstra estimated it had provided refunds of at least $5 million and it will review any future complaints in light of this action. The ACCC estimated further refunds may be in the order of several million dollars.

“The ACCC is now examining the third party billing services offered by other carriers and will not hesitate to take enforcement action if we believe they are breaching the law,” Sims said.

The ACCC undertook proceedings against Telstra under a delegation of power from ASIC.

Telstra customers are asked to check their accounts and if they believe they believe unauthorised charges have been applied, they should contact Telstra on 13 22 00 or go here.

Follow CIO Australia on Twitter and Like us on Facebookhellip;Twitter: @CIO_Australia,Facebook: CIO Australia, or take part in the CIO conversation onLinkedIn: CIO Australia

Follow Byron Connolly on Twitter:@ByronConnolly