Fines and bans for telco that ripped off Indigenous Australians

The Federal Court has fined Excite Mobile AU$455,000 and banned two of its executives from managing companies for up to three years after the company was found to have misled customers and pretended to be debt collectors.

The Australian Federal Court today handed out over half a million dollars in fines against Excite Mobile and three of its staff members after they were found to have engaged in false and misleading conduct with customers in remote indigenous communities who were signed up to lengthy contracts and then given little opportunity to leave the contracts.

In April, the court heard that Excite Mobile had targeted indigenous communities in the Cape York Peninsula, Queensland; Western Australia; and the Northern Territory.

It sought to lock customers into two-year contracts for mobile services, where in many places, the customer was not able to get coverage. The contracts were also extremely limited, with around two minutes' worth of calls per day allowed before being charged extra fees on top of the monthly charge. There was also an AU$75 cooling-off fee and an AU$195 charge for returning a damaged phone, even if only the box was damaged.

When inundated with complaints, Excite Mobile created a fictitious complaints-handling organisation called "Telecommunications Industry Complaints" that it directed complaints to, representing it as an independent complaints-handling body.

The court heard that Excite sent over a thousand letters to customers, pretending to be from an independent debt collector, to chase up money owed to Excite Mobile and to pay an additional 20 percent on top. The company also threatened to repossess assets of its customers, including children's toys.

The court today handed out an AU$455,000 penalty to Excite Mobile, and AU$55,000 and AU$45,000 in fines to directors Obie Brown and David Samuel, while employee Fiona Smart was handed an AU$3,500 fine.

Although the Australian Competition and Consumer Commission (ACCC) had sought five-year bans for both Brown and Samuel, the court disqualified Brown from managing a corporation for three years, and Samuel was disqualified from managing a corporation for two and a half years.

The trio has also been banned from engaging in similar conduct for the next seven years, and has been ordered to pay the ACCC's costs.

Justice John Mansfield said in handing down the judgment that Excite's method of debt collection had harmed its customers significantly.

"The coercion conduct was the worst feature of the debt-collection conduct, causing customers to suffer financial loss and damage, as well as non-financial harm, such as the stress caused by threats and intimidation."