Federal Court Slaps Optus with $100M Penalty

Optus Mobile Pty Ltd (Optus) has today been ordered by the Federal Court to pay a penalty of $100 million for engaging in unconscionable conduct when selling mobile phones and contracts to hundreds of Australians, and subsequent debt collection in a case brought by the ACCC.

The Court has imposed this penalty after Optus admitted it acted unconscionably, in breach of the Australian Consumer Law, and agreed to make joint submissions with the ACCC to the Court that a total penalty of $100 million was appropriate.

In many instances the affected consumers did not want or need, could not use or could not afford the phones and contracts they were sold and, in some cases, consumers were pursued for debts resulting from these sales.

Many of the affected consumers were vulnerable or experiencing disadvantage, such as living with a mental disability, diminished cognitive capacity or learning difficulties, being financially dependent or unemployed, having limited financial literacy or English not being a first language. Many of the consumers were First Nations Australians from regional, remote and very remote parts of Australia.

"Optus's conduct in this case was truly appalling, and we welcome the substantial penalty imposed by the Court and the deterrence message that it will send," ACCC Deputy Chair Catriona Lowe said.

"During the course of our investigation we heard from many people who had not only experienced significant financial harm, but also emotional distress and fear after being pursued by debt collectors for long periods."

"A company of Optus's size should have had better systems and controls in place to identify and stop this sort of behaviour," Ms Lowe said.

In his decision, Justice O'Sullivan said the consequences of Optus's conduct were "profound".

"Numerous individuals experienced severe financial harm, emotional distress, and social shame," he said.

"Particularly damaging was the heightened risk of losing access to essential telecommunications services when faced with inflated service costs."

In addition to the financial penalty, Optus has also provided the ACCC with a five-year court-enforceable undertaking that it will compensate impacted consumers and improve its internal systems.

Optus's conduct impacted over 400 consumers and occurred at 16 Optus stores between August 2019 and July 2023. Any consumer who considers they may have been impacted by similar conduct should contact Optus.

Examples of the misconduct included:

• putting undue pressure on consumers to purchase a large number of products, including expensive phones and accessories, that they did not want or need, could not use or could not afford;
• failing to explain relevant terms and conditions to vulnerable consumers in a manner they could understand, resulting in them not understanding their ongoing payment obligations;
• not having regard to whether consumers had Optus coverage where they lived;
• selling products and services which Optus knew, or ought reasonably to have known, the consumers could not afford; and
• misleading these consumers to believe that goods were free or included as part of a bundle at no additional cost.

Many impacted consumers were supported by local advocates, financial counsellors and carers in trying to seek a resolution with Optus.

"We commend the dedicated and hardworking people who assisted many of the affected consumers, and we also thank the Telecommunications Industry Ombudsman for drawing the broader conduct to our attention," Ms Lowe said.

In the case of Optus's Mount Isa store, which has now closed, the telco pursued debts in circumstances where its then senior management knew that those debts related to contracts for goods and services that appeared to have been entered into at the Optus Mount Isa Store fraudulently and without consumer knowledge.

Optus's then senior management became increasingly aware that Optus staff were engaging in the inappropriate sales practices and that Optus's systems and controls could not stop the conduct. Optus acknowledged it failed to promptly take steps to fix deficiencies in its systems, which allowed the conduct to continue.

Commission-based sales arrangements for Optus's sales staff had the clear potential to incentivise the inappropriate sales conduct, despite the Telecommunications Consumer Protections Code requiring Optus, from 17 June 2022, to have regard to the ACCC's best practice recommendations which recommend businesses avoid commission-based selling because of its potential to exacerbate the vulnerability of consumers.

This case follows similar ACCC action against Telstra, which was ordered in May 2021 to pay a $50 million penalty for engaging in unconscionable conduct when it sold mobile contracts to 108 First Nations Australians consumers between at least 1 January 2016 and about 27 August 2018.

Examples of the alleged conduct

A First Nations consumer visited an Optus store in a metro area. They were sold multiple Optus mobile plans and services, including two mobile phones, as well as accessories. The Optus sales representative manipulated the credit check, which enabled them to sell the consumer Optus services and products that they could not afford. Despite the details of the sale coming to the attention of Optus's fraud team, the consumer's debt in excess of $3,000 was referred to an external debt collection agency. The debt continued to be pursued by Optus for over a year.

In a separate example, Optus entered into four contracts with a consumer who lived with deafness and communicated by Australian Sign Language. Optus staff failed to explain the terms of the consumer's contract in a manner which they could understand. The consumer was on a disability pension, and the cost of the contracts was more than they could afford. In addition, the consumer did not need and could not use the Optus products and services. It was only with significant time and assistance of the consumer's support worker that the consumer was able to cancel the contracts.

In 2019, an internal Optus investigation into customer accounts at the Optus store in Mount Isa resulted in a report that stated that the store manager had falsified identification documents and consumer information to create contracts for services, and had used the identities of First Nations consumers who were not aware that their identities had been used. Another report identified 82 contracts that appeared to have been fraudulently completed without consumer knowledge.

After Optus was notified of the conduct that was the subject of the reports, including its senior management at the time, it still referred and sold outstanding debts associated with some of those contracts to third party debt collection and factoring agencies. Some consumers whose identities were associated with the relevant customer accounts were subject to threats of legal proceedings being commenced against them and of reporting defaults to credit reporting bodies. Some customers continued to be pursued by third party collections agencies until as late as July 2024 and Optus had not taken steps to stop that occurring.

The ACCC acknowledges Optus's cooperation in resolving the Court proceedings at an early stage and providing a court-enforceable undertaking. The undertaking includes:

• a 3-year consumer remediation program
• changes to remuneration and incentives for Optus sales staff designed to prevent further conduct from occurring
• a requirement for Optus to ensure that certain Optus Licensee stores in the Northern Territory, regional Queensland and South Australia are directly operated by Optus
• process and system changes, for example improvements to Optus's complaints handling process for consumers experiencing vulnerability and/or disadvantage, and
• a $1 million donation to an organisation facilitating digital literacy of First Nations Australians.

The Court also ordered Optus to pay a contribution to the ACCC's costs, by consent.

Optus customer support

Consumers who think they may have been impacted by conduct similar to that outlined in Optus's undertaking to the ACCC can call Optus's specialist customer care team on 1300 082 820 for further information or support.

They can also visit the Sales Misconduct Response page on Optus's website.

Background

Questions regarding the recent Optus outage affecting triple-0 call services are unrelated to this judgment and should be directed to the Australian Communications and Media Authority (ACMA). The ACCC does not have a role in regulating or enforcing compliance with emergency call service regulations and other related rules.

Optus is Australia's second largest telecommunications provider. It is a wholly-owned subsidiary of Singtel Optus Pty Ltd, a foreign owned private company.

In Australia, Optus's retail stores are either:

• owned and operated directly by Optus RetailCo Pty Ltd; or
• owned and operated through third party licensees, through Retail License Agreements. For example, prior to Optus buying back certain stores, all Optus stores in the Adelaide region were owned and operated by Mavaya Pty Ltd, and all Optus stores in the Northern Territory, as well as several in regional Queensland, were owned and operated by Suntel Communications Pty Ltd.

On 31 October 2024, the ACCC commenced court action against Optus. The investigation was prompted by a referral from the Telecommunications Industry Ombudsman.

On 18 June 2025, the ACCC announced that Optus had admitted to engaging in unconscionable conduct and agreed to a total penalty of $100 million, subject to Court approval.