Massive court penalty of $50 million against Telstra sends a very clear message

Today’s $50 million fine against Telstra for unconscionable conduct sends a clear message to the industry that mis-selling will not be tolerated.

The ACCC began investigating allegations of unconscionable conduct by Telstra after financial counsellors approached the regulator with 100 examples of Indigenous people from across the Northern Territory, South Australia and Western Australia being mis-sold telco products.

Telstra staff in five stores convinced Indigenous consumers to sign up to multiple post-paid mobile contracts which they didn’t understand and could not afford. Many accumulated massive debts – one as much as $19,000.

The ACCC then instituted Federal Court proceedings against Telstra for unconscionable conduct. Telstra admitted it breached consumer law and the court has now confirmed that the proposed fine of $50 million – the second largest in Australia under the Australian Consumer Law – is appropriate.

Based on the experience of financial counsellors, mis-selling in the telco industry more broadly remains a live issue. 80% of the financial counsellors in our survey in April 2021 said that they had clients where mis-selling was an issue. The Telecommunications Consumer Protection Code is not working to protect consumers.

Telstra is working constructively with financial counsellors in its remediation program and we welcome their ongoing commitment to this process.

Quotes

Fiona Guthrie AM, CEO of Financial Counselling Australia

“We welcome this development and are also pleased to see that Telstra, in addition to the remediation actions they have embarked upon to date, have formally acknowledged the damage their behaviour has caused.”

“Financial counsellors have worked for three years together to see this ACCC action succeed. Today’s announcement is an important milestone but it’s not the end of our campaign to see mis-selling in the telecommunications industry stamped out.”

Peter Gartlan, Financial Counselling Australia

“This conduct should never have happened in the first place. The ACCC has now sent a clear message to corporate Australia and other telcos, that this sort of behaviour is not on. It causes harm to individuals and families.”

“This case shows the vital role financial counsellors play in ensuring vulnerable consumers are protected from unconscionable conduct.”

“Time and time again, financial counsellors in outback towns and cities have seen clients from remote communities struggling under the weight of massive Telstra debts – one client had a debt of more than $19,000.”

“Financial counsellors are pleased that Telstra is waiving these debts, but we fear there are more remote people who still have debts with telcos and also need redress.”

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