Telstra Joins 'Dodgy Companies Club' After Massive $10m Fine

Galtero Lara
Abril 27, 2018

The regulator, the Australian Competition and Consumer Commission (ACCC), took Telstra to court for misleading customers and breaching the ASIC Act.

As part of this resolution, Telstra has ceased operating the PDB service entirely and will refund customers affected by its conduct.

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.

Specifically, the court found that in 2015 and 2016, Telstra did not adequately inform customers it had set the Premium Direct Billing service as a default on their mobile accounts.

Telstra previously admitted to misleading customers by charging them for content they didn't know they had bought, such as games and ringtones, through a premium direct billing arrangement.

The Federal Court finding was by consent, meaning Telstra decided not to fight the fine.

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".

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This allowed children or others using someone else's phone could inadvertently subscribe. The court heard that until October 2017, Telstra had generated a net revenue of $61.7 million via PDB content charges. "In the ACCC's view, such conduct falls below expectations for appropriate corporate behaviour".

The company estimates it has provided refunds of at least $5 million and it will review any future complaints in light of this action.

"We stopped providing new subscription-based services like these in December, and completely exited the service from 3 March this year".

Telstra will be refunded affected customers, it has already forked out $5m worth of refunds.

During the past month, the spokesman told ARN that a "dedicated team" has contacted numerous customers who have been impacted by this to apologise and to offer refunds.

Sims said the ACCC "will not hesitate to take enforcement action" if it believes other carriers have also breached the law.

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