The Federal Court of Australia has fined Telstra $50m for its treatment of Indigenous customers, citing the telco’s ‘unconscionable’ sales conduct.
We first reported on this case last year when the ACCC raised concerns about Telstra’s sales practices across five Telstra-branded stores between 2016 and 2018, which the court said was misleading, unethical and unconscionable.
The consumer watchdog said that “sales staff at five licensed Telstra-branded stores signed up 108 Indigenous consumers to multiple post-paid mobile contracts which they did not understand and could not afford.”
Get ISO 9001 – Quality Management – Certification With Best Practice
In some cases, multiple phone plans were sold to a single customer, where thousands of dollars worth of extra charges were applied to the account without their prior understanding of the contract.
It’s alleged that some members of Telstra’s sales team misled Indigenous customers to believe that some products were free, and eventuated with those customers being chased down by debt collectors for a failure to pay their bill.
The average debt per person is said to have totalled $7,400, while one Indigenous customer owed more than $19,000.
At the time of publishing its report, the ACCC said it would take its findings to the Federal Court, where a potential penalty of $50 million could be levelled against the telecommunications giant.
In the most recent turn of events, the Federal Court did indeed rule that Telstra’s conduct was egregious, with the company now receiving a $50 million fine for the treatment of its Indigenous customers.
It’s the second-largest penalty enforced in Australia for a circumvention of consumer law after Volkswagen’s 2019 fine of $125 million for its role in the ‘dieselgate’ emissions-testing scandal.
The ACCC’s Chair, Rod Simms has issued a statement saying that “sales staff in these Telstra-branded stores used unconscionable practices to sell products to dozens of Indigenous customers who, in many cases, spoke English as a second or third language.”
“This conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers.”
Telstra Fined $50m for ‘Unconscionable’ Treatment of Indigenous Customers
Simms added that “Telstra’s board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them,” stating that the fine “is appropriate given the nature of the behaviour by Australia’s biggest telecommunications company, which was truly beyond conscience.”
Peter Gartlan of the Financial Counselling Australia organisation has told The ABC that the ruling “sends a clear message to the telco industry that mis-selling practices will not be tolerated.”
“This conduct should have never happened in the first place,” he added.
When the ACCC first published its investigation, Telstra’s Chief Executive, Andrew Penn apologised for the company’s failings, adding that “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,” he added.
“This included appointing a customer advocate to help us better identify and respond to such issues, working more closely with community representatives and financial counsellors, and shortly introducing a call centre in the Northern Territory which will also assist our Indigenous customers.”