Watchdog probes Telstra for misleading customers over premium billing charges

The Australian Competition and Consumer Commission (ACCC) has announced that it has started proceedings against Telstra, alleging that the operator made false or misleading representations to consumers in relation to its third-party billing service known as ‘Premium Direct Billing’ (PDB). Telstra has admitted that it made these representations and agreed to consent to orders in the Federal Court, including declarations that Telstra breached the ASIC Act, and to make joint submissions in relation to the imposition of pecuniary penalties totalling AUD 10 million. Telstra has also committed to offer refunds to affected customers.

The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.

According to the ACCC, during 2015 and 2016, thousands of Telstra mobile phone customers unwittingly signed up to subscriptions or charges with third parties, without being required to enter payment details or verify their identity. Telstra has admitted that more than 100,000 customers may have been affected and charged.

Telstra has acknowledged its internal processes for dealing with these issues were inadequate and will refund customers affected by this conduct. Telstra estimates it has provided refunds of at least AUD 5 million, and it will review any future complaints in light of this action and deal with those customers in good faith. The ACCC estimates further refunds may be in the order of several million dollars.

As part of this resolution, Telstra has ceased operating the PDB service entirely.

“The ACCC is aware that other carriers offer similar third party billing services to their customers. We are monitoring complaint levels and will take enforcement action in relation to these carriers if we believe they are breaching the law”, the ACCC also said.