ACCC seeks AU$10m penalty for Optus billing practices

Following successful legal action against Telstra, the ACCC has now hauled Optus to court over its direct carrier billing practices, seeking refunds for affected customers, as well as a AU$10 million penalty.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has announced commencing legal proceedings against Optus for its direct carrier billing (DCB) practices, seeking AU$10 million in penalties.

According to the ACCC, Optus has admitted to making false or misleading representations in breach of the ASIC Act, with joint orders to the Federal Court including declarations that Optus contravened the Act.

Optus has also agreed to refund the more than 240,000 customers who were affected by its DCB practices since April 2014, with the telco having so far provided around AU$12 million while third-party providers have refunded an additional AU$19 million.

The "premium content" services for which Optus customers were charged included ringtones, games, and horoscopes, with the ACCC claiming that customers had not wanted or agreed to purchase these.

"A substantial number of Optus customers were signed up to subscriptions for expensive, often unwanted content without being required to enter payment details or verify their identity, as occurs with many other online purchases," ACCC Chair Rod Sims said on Wednesday.

"Many customers didn't realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder's knowledge.

"Despite over 600,000 direct enquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections."

Optus had additionally agreed to shutter its DCB service as of August 24, 2018, which it has operated since May 2012.

The ACCC's legal action against Optus follows the consumer watchdog taking action against Telstra last year for a similar issue.

"The ACCC is continuing its investigation into third party billing services by other carriers, and further enforcement action may well follow," Sims said on Wednesday.

Last month, the ACCC had announced that Telstra has issued refunds to 72,000 customers of AU$9.3 million in total after misleading customers on its premium direct billing (PDB) service.

"Following our action, Telstra has paid close to AU$20 million in penalties and refunds. This should serve as a warning to all telecommunication providers that misleading and deceiving customers will result in serious consequences," Sims said in September.

The Australian Federal Court had in April ordered Telstra to pay AU$10 million in penalties for making false or misleading representations to consumers on the management of its PBD services, with Telstra at the time committing to refund affected customers.

The ACCC had taken legal action against the telco on the matter, with the court earlier this year holding by consent that Telstra misled customers and breached the ASIC Act.

According to the ACCC, between 2015 and 2016 Telstra made false or misleading representations to consumers by charging more than 100,000 customers for PDB subscription services who had not requested them or had the ability to opt out of them.

Telstra also ceased operating the PDB service.

Telstra had in March admitted to making the false or misleading representations and agreed to consent to Federal Court orders involving pecuniary penalties of AU$10 million.

PDB services had allowed customers to charge game, app, and video purchases to their mobile bill until Telstra last year announced that it would cease such services as of March 3, 2018.


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