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Telstra faces $50m fine for unconscionable conduct towards Indigenous customers

  • November 26 2020
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Telstra faces $50m fine for unconscionable conduct towards Indigenous customers

By Cameron Micallef
November 26 2020

Australia’s largest telecommunications provider has admitted to unconscionable contact towards Indigenous consumers, which could see them pay a penalty of up to $50 million, the consumer watchdog has revealed.

Telstra

Telstra faces $50m fine for unconscionable conduct towards Indigenous customers

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  • November 26 2020
  • Share

Australia’s largest telecommunications provider has admitted to unconscionable contact towards Indigenous consumers, which could see them pay a penalty of up to $50 million, the consumer watchdog has revealed.

Telstra

Between January 2016 to August 2018, Telstra admitted to breaching Australian Consumer Law and acted unconscionably when sales staff at five branded stores signed up 108 Indigenous consumers to multiple postpaid mobile devices they could not afford.

Telstra has admitted staff at five stores in WA, SA and NT took advantage of the strong bargaining position it was in when selling post-paid mobile products to 108 Indigenous customers who did not know they couldn’t afford it. Telstra has agreed to submissions in support of penalties totalling $50 million but it is now for the court to decide

The average debt per consumer was more than $7,400. 

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Telstra has admitted its staff used “unfair selling tactics” and “took advantage of a substantially stronger bargaining position”.

“This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers,” ACCC chair Rod 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.”

The improper sales practices caused many of the affected consumers severe personal financial hardship and great distress. Telstra referred some unpaid debts to debt collectors, which had the potential to cause those consumers to feel further personal and cultural shame and embarrassment.

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

Many of the consumers spoke English as a second or third language and had difficulty understanding Telstra’s written contracts. Many were unemployed and relied on either government benefits or pensions as their primary source of incomes and some resided in remote areas where Telstra was the only network. In each case, the contracts were entered into with individual consumers on a single day when they visited the stores.

Telstra chief apologises

Telstra chief Andrew Penn apologised for the staff tactics, saying it was “failing” by the company.

“I have spoken often about doing business responsibly, including about these failings, since earlier this year. I am determined we have a leadership position and hold ourselves accountable in this regard,” he told the media.

“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.”

Telstra has since taken steps to waive the debts, refund money paid and put in place steps to reduce the risk of similar conduct in the future. It will also provide remediation to affected consumers, improve existing compliance programs, review and expand its Indigenous telephone hotline and enhance digital literacy programs for consumers.

Telstra faces $50m fine for unconscionable conduct towards Indigenous customers
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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