Telstra admits signing Indigenous customers in the NT to phone plans they could not afford

Telstra admits to acting unfairly in signing up people to phone plans they had no hope of ever paying for.
Telstra admits to acting unfairly in signing up people to phone plans they had no hope of ever paying for.

Telstra has admitted signing up Indigenous customers to phone plans they could not afford.

One Northern Territory customer ended up with a debt of more than $19,000.

Telstra has admitted staff at five stores in the NT, South Australia and Western Australia used unfair selling tactics and took advantage of a substantially stronger bargaining position when selling post-paid mobile products on behalf of Telstra.

The stores named today by the Australian Competition and Consumer Commission were at Alice Springs, Casuarina and Palmerston plus Arndale in SA and Broome in WA.

The ACCC has today instituted Federal Court proceedings against Telstra for unconscionable conduct.

Telstra agreed it breached consumer law when sales staff signed up 108 Indigenous consumers to multiple post-paid mobile contracts which they did not understand and could not afford between January 2016 to August 2018.

In each case, these contracts were entered into with individual consumers on a single day when they visited a store.

The average debt per consumer was more than $7400.

Many of the consumers spoke English as a second or third language, had difficulties understanding Telstra's written contracts, and many were unemployed and relied on government benefits or pensions as the primary source of their limited income.

Some lived in remote areas where Telstra provided the only mobile network.

The ACCC said in some cases, sales staff at the Telstra licensed stores did not provide a full and proper explanation of consumer's financial exposure under the contracts and, in some cases, falsely represented that consumers were receiving products for 'free'.

In many instances, sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment could enter into post-paid mobile contracts.

This included falsely indicating that a consumer was employed.

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Telstra has acknowledged that it had no effective systems in place to detect or prevent this type of conduct.

Telstra has agreed to the filing of consent orders and joint submissions in court in support of possible penalties of $50 million.

"This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers," ACCC chair Rod Sims said.

"Even though Telstra became increasingly aware of elements of the improper practices by sales staff at Telstra licensed stores over time, it failed to act quickly enough to stop it, and these practices continued and caused further, serious and avoidable financial hardship to Indigenous consumers."

The improper sales practices caused many of the affected consumers severe personal financial hardship and great distress.

Telstra has since taken steps to waive the debts, refund money paid and put in place steps to reduce the risk of similar conduct in the future.

Telstra has since taken steps to waive the debts, refund money paid and put in place steps to reduce the risk of similar conduct in the future.

Telstra referred some unpaid debts to debt collectors, which had the potential to cause those consumers to feel further personal and cultural shame and embarrassment.

"These debts significantly impacted the affected individuals. For example, one consumer had a debt of over $19,000; another experienced extreme anxiety worrying they would go to jail if they didn't pay; and yet another used money withdrawn from their superannuation towards paying their Telstra debt," Mr Sims said.

Telstra has since taken steps to waive the debts, refund money paid and put in place steps to reduce the risk of similar conduct in the future.

In addition to the remedies to be determined by the Court, the ACCC has accepted a court-enforceable undertaking from Telstra in which Telstra undertakes to provide remediation to affected consumers, improve its existing compliance program, review and expand its Indigenous telephone hotline and enhance its digital literacy program for consumers in certain remote areas.

"Telstra is Australia's largest telecommunications provider. It has clearly failed to meet community expectations for appropriate business behaviour," Mr Sims said.

"This case is a reminder to all businesses to ensure that they comply with Australian Consumer Law in their dealings with all consumers, especially vulnerable consumers in regional or remote communities."

This story Telstra admits signing Indigenous customers to phone plans they could not afford first appeared on Katherine Times.