Telstra has been accused of using unfair sales tactics to enroll 108 indigenous customers in overpriced mobile plans that they couldn’t understand or pay for.
The revelations come from the control body of the Australian Competition and Consumer Commission (ACCC), which today initiated legal proceedings against the telecommunications company for “excessive conduct”.
Telstra admitted to the ACCC that it had violated Australia’s Consumer Law by signing customers to multiple postpaid mobile contracts between January 2016 and August 2018.
Staff at five stores in the Northern Territory, South Australia and Western Australia are accused of taking advantage of “a substantially stronger bargaining position” by selling to customers, many of whom were unemployed and spoke English as a second or third language.
Some lived in remote areas where Telstra only had a mobile network available.
In some cases, sales personnel falsely represented that indigenous consumers received “free” products.
In others, staff manipulated credit checks to indicate that some customers were hired to make sure they could enroll them in mobile plans.
Average debt per consumer was more than $ 7,400.
ACCC President Rod Sims said the debts created by these mobile plans caused great distress for Indigenous consumers, many of whom were worried about being sent to jail for not being able to pay.
In some cases, Telstra remitted unpaid debts to debt collectors.
“These debts significantly affected the people affected,” Sims said.
“For example, one consumer had a debt of more than $ 19,000; another experienced extreme anxiety because he was worried about going to jail if he didn’t pay; and another used money withdrawn from his retirement to pay off his Telstra debt.”
Submissions made to Federal Court by the ACCC and Telstra recommend that the telecommunications company pay total fines of $ 50 million.
It is now part of the court’s decision whether this sum is appropriate.
Since then, Telstra has waived the debts and repaid the money that the 108 consumers paid to the telecommunications company.
In a statement, Telstra CEO Andrew Penn said the organization was determined to correct the errors found by the ACCC.
“I have spoken often about doing business responsibly, including these failures, since the beginning of this year. I am determined that we have a leadership position and hold ourselves accountable in this regard,” Penn said.
“While there were a small number of licensed stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not okay.
“We’ve taken steps to provide full interest-bearing refunds, waive debt, and allow most customers to keep their devices to help get things done right.”
Telstra’s board of directors and senior executives were not aware of, involved in, or authorized to do so, these sales practices.