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- The consumer watchdog will take Telstra (TLS) to court after the telco admitted to “unconscionable conduct” while selling phone plans to Indigenous consumers
- The ACCC found 108 consumers were sold plans they didn’t understand or couldn’t afford between 2016 and 2018
- As a result, Telstra could be slapped with a $50 million fine — but it’ll be up to the Federal Court to determine the final penalty
- Today, ACCC Chair Rod Sims said the case exposed “extremely serious conduct” and “exploited social, language, literacy and cultural vulnerabilities” of the Indigenous consumers
- The average debt per TLS consumer clocked in at around $7400
- Telstra shares are currently flat, trading at $3.10 per share
The consumer watchdog will take Telstra (TLS) to court after the telco admitted to “unconscionable conduct” while selling phone plans to Indigenous consumers.
The ACCC spent 18 months investigating the ASX 200-lister after it revealed five Telstra-branded stores signed up consumers to plans they didn’t understand and couldn’t afford.
Specifically, 108 Indigenous consumers entered the post-paid mobile contracts across TLS stores in the Northern Territory, South Australia, and WA between 2016 and 2018.
As a result, Telstra could face a $50 million fine — ultimately, though, it’ll be up to the Federal Court to conclude how much the telco needs to pay.
The consumer watchdog found many of these customers were unemployed, relied on Government benefits and often lived in remote areas. For some, English was their second or third language.
“This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers,”
ACCC Chair, Rod Sims
“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,” Rod explained.
The average debt per TLS consumer clocked in around $7400, something the ACCC Chair said caused “extreme anxiety” for Indigenous consumers. One customer had to draw on their super balance in order to settle their Telstra debt.
Telstra Chair John Mullan and CEO Andrew Penn commented on the issue in the company’s FY20 report.
“In our initial response to these complaints, we failed to recognise
that many of these customers were vulnerable, and our initial remediation
was based too much on our terms and conditions and not on our purpose and
values,” the executives stated in August.
“The lessons we have learned through this experience have informed important
changes in how we do business and are helping us re-define our understanding of
what responsible business looks like in the new decade,” they concluded.
TLS shares are currently trading flat at $3.10 per share at 11:21 am AEDT.
