Telstra has been hit with the second-biggest fine in Australian history, $50 million, for engaging in unconscionable conduct against more than 100 Indigenous customers across Australia between 2016 and 2018.
In the Federal Court the business admitted to staff breaching consumer law at five of its licensed Telstra stores when they manipulated credit assessments to make customers that would fail such an assessment would instead pass, failed to properly explain potential costs and mischaracterised devices as ‘free’, when they were anything but.
This was not staff acting out, the Federal Court heard during the trial, but a sales tactic that was coached into them by store management.
The stores in question were Alice Springs, Casuarina and Palmerston in the Northern Territory, Arndale in South Australia, and Broome in Western Australia.
ACCC chair Rod Sims said Telstra’s board and executives failed to act to stop this behaviour when they were first made aware of it in 2017.
“[The fine] is appropriate given the nature of the behaviour by Australia’s biggest telecommunications company, which was truly beyond conscience,” Sims said.
“We expect much better from large businesses like Telstra, but all businesses in Australia have a responsibility to ensure sales staff are not breaching consumer law by manipulating or tricking consumers into buying products or services they do not need or cannot afford.”
According to a report in the ABC, customers who had become saddled with debt through these means were targeted by debt collectors, and some feared jail time for ballooning debt. Efforts to work out payment plans with Telstra also went ignored, as these customers were asked to repay the full amount owed – an amount that was purposefully put on Australians who couldn’t afford it.
The telco has admitted liability, and has since taken steps to waive the debts to customers, refund money paid (with interest) and put measures in place to “reduce the risk of similar conduct in the future”.
Telstra CEO Andrew Penn apologised in a letter on Telstra’s exchange platform, where he outlined some of the ways Telstra was moving forward from the fine: including a First Nations Connect hotline to provide language support, a cultural awareness training platform, the appointment of an Indigenous Cultural Compliance Officer, and an Indigenous Policy statement.
“I want to stress that words are easy but it is living up to them that is the real test,” Penn said.
“It’s a test all of us at Telstra accept and are committed to passing.”