Australia’s second largest telecommunications provider Optus has agreed to pay a $100 million fine for unconscionable conduct when selling its products and services to hundreds of customers.

According to the ACCC, Optus admitted its staff had acted unconscionably when selling phones and contracts to over 400 consumers at 16 stores across Australia between August 2019 and July 2023. 

In many cases, the consumers did not want or need, could not use or could not afford what they were sold, with some even pursued for debts after these sales.

Many of these consumers were vulnerable or experiencing disadvantages, such as having a mental disability, being financially dependent or unemployed, or having limited financial literacy. Many of them were also First Nations Australians from regional and remote locations.

The sales staff were found to use tactics like putting undue pressure on consumers to purchase a large number of products, failing to explain relevant terms and conditions, and misleading consumers to believe that goods were free.

In one example, a First Nations consumer, who speaks English as a second language and lives in a remote community, was approached by Optus staff outside an Optus store and pressured to enter. They thought staff were offering them a free phone and other free products and felt pressured to accept.

The customer was contracted to two high-end phones and three phone plans among others with a total minimum cost of $3808 over 24 months. As the false information was entered into their credit check, the customer had their debt referred to debt collectors and was contacted on many occasions by the debt collector. 

Another consumer, who lives with an intellectual disability, attended an Optus store with a support worker to purchase a $20 pre-paid recharge for their phone. They were told by staff that they could get a new phone and a free speaker for $30 a month, and were pressured into the purchase.

The staff added a false ABN to the customer’s account and manipulated credit checks and made three contracts for a phone, plans and a smart watch and accessories that cost over $8000 over 36 months. The consumer eventually went to a community legal centre to seek help on cancelling the contracts. 

“The conduct, which included selling inappropriate, unwanted or unaffordable mobiles and phone plans to people who are vulnerable or experiencing disadvantage is simply unacceptable,” said ACCC deputy chair Catriona Lowe.

“It is not surprising, and indeed could and should have been anticipated, that this conduct caused many of these people significant emotional distress and fear.”

Optus CEO Stephen Rue issued a statement apologising to customers impacted by the misconduct, which he described as “inexcusable and unacceptable”.

“Optus failed these customers, and the company should have acted more quickly when the misconduct was first reported,” he said.

“I am leading the implementation of extensive changes across the company with active responses to the issues raised well underway. However, there is much more to do as we work to regain our customers’ trust and improve support and protections for them, especially for those who are vulnerable.”

Signed undertaking

Aside from the fine, Optus has signed an undertaking that it will compensate impacted consumers and improve its internal systems.

Among the actions, the company has started compensating consumers and commenced buying back 34 Optus licensee stores in the NT, Queensland and SA. It will also make a $1 million donation to an organisation facilitating digital literacy of First Nations Australians.

Both the penalty and the undertaking are still pending for the final approval from the Federal Court.

In 2021, Telstra was ordered to pay a $50 million penalty for engaging in unconscionable conduct when selling mobile contracts to 108 Indigenous consumers.

Carol Bennett, CEO of the Australian Communications Consumer Action Network, welcomed the fine.

“Unconscionable conduct is a high bar and one that Optus has spectacularly surpassed in its behaviour, preying on some of our most vulnerable communities and consumers, including Indigenous communities,” she said.

“Phone and internet products are not a luxury – they are fundamental and essential services. To manipulate, abuse and exert control over people reliant on the product or service being sold represents a cruel and uncaring approach. It beggars’ belief that Optus or any telco could feel this behaviour is acceptable,” Bennett said.