Australia’s Federal Court has ordered Telstra to pay AUD 50 million in penalties for engaging in unconscionable conduct when it sold mobile contracts to more than 100 Indigenous consumers across three states and territories. Court proceedings were brought by the Australian Competition and Consumer Commission (ACCC) in November 2020. The AUD 50 million penalty imposed against Telstra is the second highest penalty ever imposed under the Australian Consumer Law.
Telstra admitted that, between January 2016 and August 2018, it breached the Australian Consumer Law and acted unconscionably when sales staff at 5 licensed Telstra-branded stores signed up 108 Indigenous consumers to multiple postpaid mobile contracts which they did not understand and could not afford.
According to ACCC chair Rod Sims, 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, Sims added.
The ACCC also found that, in some cases, sales staff at the licensed stores failed to properly explain the potential costs of the contract to the consumers and falsely represented that consumers were receiving products for 'free'. In many instances, sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment process could purchase post-paid mobile products. This included falsely indicating that a consumer was employed when they were not.
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 also reports.
In addition to the remedies ordered by the Federal Court, the ACCC has accepted a court-enforceable undertaking from Telstra, in which the operator plans 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.
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.
Telstra accepts court’s decision
In a separate statement, Telstra says it accepts court’s decision and that many of the programmes that form part of its undertaking with the ACCC are already well underway.
Telstra has already set up a First Nations Connect hotline in Darwin to provide language support to these customers. The cultural awareness training is now mandatory for anyone at Telstra who engages with Indigenous consumers. A new Indigenous Cultural Compliance Officer has been appointed and is now charged with reviewing the way the company engages with Indigenous customers.
Telstra also continues to offer remediation to any customers who might have been impacted between 2016/18 by its past conduct at the stores in question but who have not yet come forward. An information programme is underway to make sure that offer is well known across these communities.
The operator has also launched a new Indigenous Policy statement which details how Telstra engages, supports and plays its part in Indigenous communities, including through the positive difference that communication and connectivity can have in these communities.
