Telecoms Giant Telstra Deliberately Cheated Indigenous Australians

Cornelia Mascio
Novembre 28, 2020

Telstra Corp. faces the second-biggest penalty ever imposed for breaching consumer laws in Australia after admitting mis-selling mobile-phone contracts to more than 100 Indigenous Australians who couldn't afford the plans or understand the terms and were plunged into debt.

The competition regulator said numerous affected customers 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.

Staff also faked credit assessments to ensure customers would be eligible for the contracts, all of which were signed by people on the day they visited stores.

The average debt per consumer was more than A$7,400.

ACCC chairman Rod Sims said the debts created by these mobile plans caused great distress to the Indigenous consumers, many of whom were anxious they would be sent to jail for being unable to pay.

Some of the debts were referred to debt collectors by Telstra. In other cases they falsely recorded that a consumer was employed so that they could pass a credit assessment.

The federal court will decide at a later date whether the penalty is appropriate.

The ACCC also found that, 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".

Telstra has acknowledged it didn't have effective systems in place to detect or prevent the conduct.

Two weeks ago the industry regulator, the ACMA, ordered Telstra to repay A$2.5 million to customers who had been overcharged for landline repairs.

Telstra has agreed to the filing of consent orders and joint submissions in Court in support of penalties totaling AUD 50 million being imposed by the Court.

The company has 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 Chair John Mullan and CEO Andrew Penn commented on the issue in the company's FY20 report.

"While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not ok".

"As part of doing that, early this year I visited some of the affected communities to apologise in-person. When we looked more deeply it was clear there were additional instances where our processes had not been followed and our understanding of customers could have been better", Penn said. "We need to acknowledge when that happens, and today is unfortunately one of those times".

"This case exposes extremely serious conduct which exploited social, language, literacy and cultural vulnerabilities of these Indigenous consumers", the chairman of the Australian Competition and Consumer Commission (ACCC) Rod Sims said in a statement.

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