Telstra refunds customers AU$9.3m for billing practices

After being fined AU$10 million for misleading customers on its management of premium direct billing services, Telstra has also had to refund customers a total of AU$9.3 million.
Written by Corinne Reichert, Contributor

The Australian Competition and Consumer Commission (ACCC) has 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.

"We are pleased to see so many customers refunded by Telstra. It's clear a large number were charged for content like ringtones and wallpapers that they did not want, did not use, and had difficulty unsubscribing from," ACCC Chair Rod Sims said on Friday morning.

"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."

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.

"Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity. By introducing and operating the Premium Direct Billing service, Telstra generated substantial profits by exposing customers to unauthorised charges," Sims said in April.

"Telstra was aware that children were at risk of inadvertently subscribing on a family member's phone. The AU$10 million penalty imposed by the court recognises the seriousness of Telstra's conduct. In the ACCC's view, such conduct falls below community expectations for appropriate corporate behaviour."

Telstra also ceased operating the PDB service, and said it will review future related complaints in good faith.

"The ACCC is now examining the third-party billing services offered by other carriers and will not hesitate to take enforcement action if we believe they are breaching the law," Sims added at the time.

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.

Australia's incumbent telco had earned around AU$61.7 million in revenue from PDB until October 2017, according to the ACCC, and from early 2015 to mid-2016 received "a large number of calls disputing such charges".

"Our customers have the option of buying things online that can be charged to their Telstra bill, and for their convenience we aim to make it as simple as possible. It is clear for this specific type of service, we did not get that right," group exec of Consumer and Small Business Vicki Brady said in March.

"A large proportion of customers who decided to subscribe to a service were happy with it; however, the number of complaints received over time shows there were issues with the PDB service that needed to be addressed ... Telstra took a number of steps to improve our processes but acknowledge we could have done more and done it faster."

Telstra had announced in December that it would halt DCB services.

"From 3 December 2017, you will not be able to subscribe to new digital content, apps, or services from other companies through Premium SMS or Telstra Carrier Billing. This is because we're phasing out Premium Service subscriptions," Telstra said at the end of last year.

Still being charged to customers' Telstra bills are Google Play, Windows Store, AirG Chat, AFL or NRL apps, Apple Music, Foxtel Now, Telstra TV, Telstra Play, Caller Tones, other Telstra subscription content, and one-time charges such as online voting, competition entries, and donations.

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