Telstra charged $10m over misleading third-party billing

Telstra will have to pay $10 million in penalties after making false or misleading representations to its customers with regards to its third-party billing service.

The Federal Court held, by consent, that Telstra misled customers and breached the ASIC Act when it charged them for digital content, such as games and ringtones, which they unknowingly purchased.

Telstra admitted that more than 100,000 customers may have been affected by its Premium Direct Billing (PDB) service and has committed to offer refunds to these customers.

The Court found that in 2015 and 2016, Telstra did not adequately inform customers it had set the PDB service as a default on their mobile accounts. If customers accessed content through this service, even unintentionally, they were billed directly by Telstra.

“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 PDB service, Telstra generated substantial profits by exposing customers to unauthorised charges,” ACCC Chairman Rod Sims said.

“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone. The $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,” Sims said.

As part of this resolution, Telstra has ceased operating the PDB service entirely and will refund customers affected by its conduct. Telstra estimates it has provided refunds of at least $5 million, and it will review any future complaints in light of this action and deal with those customers in good faith. The ACCC estimates further refunds may be in the order of several million dollars.

“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 said.

Telstra will assess complaints about the PDB service and provide refunds where it is apparent that the customer had signed up to PDB content without their knowledge or consent.

It has also agreed to contact and offer refunds to affected customers it knows have already complained to the Telecommunications Industry Ombudsman (TIO) or to Telstra directly about subscription charges under the PDB service but who have not already received a refund.

Image credit: ©stock.adobe.com/au/badztua

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