Telstra penalised $50m for unconscionable conduct

Telstra has been fined a whopping $50 million by the Federal Court for engaging in unconscionable conduct.

The telco retailer admitted it breached the Australian Consumer Law and acted unconscionably when 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.

The Australian Competition and Consumer Commission brought the legal action against the telco giant.

ACCC Chair Rod Sims said “The $50 million penalty imposed against Telstra is the second highest penalty ever imposed under the Australian Consumer Law. This is appropriate given the nature of the behaviour by Australia’s biggest telecommunications company, which was truly beyond conscience.”

Sales staff in the licensed stores had used unconscionable practices to sell products to Indigenous customers for whom English was a second or third language, Sims said.

“This conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers.”

Sims pointed to Telstra’s board and senior executives’ failure to respond quickly to stop the illegal actions once they were alerted to them.

Telstra has since taken steps to waive the debts, refund money paid and put in place measures to reduce the risk of similar conduct in the future.

The ACCC has accepted a court-enforceable undertaking from Telstra in which the telco agrees to provide remediation to affected consumers, improve its existing compliance program, review and expand its Indigenous telephone hotline, and enhance its digital literacy program for consumers in certain remote areas.

“We expect much better behaviour from large businesses like Telstra,  but all businesses in Australia have a responsibility to ensure sales staff are not breaching consumer law by manipulating or tricking consumers into buying products or services they do not need or cannot afford,” Sims said.

Telstra admitted liability, cooperated with the ACCC’s investigation and made joint submissions with the ACCC to the Court in relation to penalty and other orders.