More than 100,000 Telstra customers may be eligible for refunds after a Federal Court ruling will force the company to pay a $10 million fine for breaches related to its now-discontinued Premium Direct Billing (PDB) service.
PDB was introduced as a way of allowing mobile customers to pay for third-party services on their normal Telstra bills. However, over time it became clear that many customers were being billed for third-party ringtones, games and other content that they had not explicitly requested.
Regular delivery of content was difficult to cease, and the Court found that Telstra breached the ASIC Act by automatically enabling the PDB service on customer accounts, without adequately informing them. This led to situations where inadvertent subscriptions – for example, by children using their parents’ mobile phones – led to massive and ongoing charges.
“Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity,” Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said in announcing the Federal Court decision, noting that Telstra’s conduct “falls below community expectations for appropriate corporate behaviour”.
Telstra already estimates it has provided refunds of more than $5m and is continuing to work through customer claims as it works to provide redress for the service, which it discontinued on 3 March. The company flagged issues with PDB as far back as August 2017, when it announced plans to discontinue PDB by December of that year.
Last financial year (2016-2017), Telstra reported a net profit after tax of $3.9 billion.
Vicki Brady, Telstra group executive of consumer and small business, acknowledged “issues” with the service and apologised to affected customers.
“Telstra took a number of steps to improve our processes but acknowledges we could have done more and done it faster.”
A global growth opportunity
In addition to the court action, Telstra’s decision to discontinue the DCB service has earned it the ire of many partners: digital marketing company Impelus Limited, for one, called a trading halt in January after cessation of PDB was floated. Its share price has dropped by nearly half in the intervening time.
That company had been providing PDB services through Telstra for more than four years – leading CEO and managing director Neil Wiles to argue in a recent ASX statement that the company was “extremely disappointed”, and warning that “premature withdrawal of the services in March 2018 would have a material impact” that was estimated at between $550,000 and $680,000 in lost EBITDA.
Direct carrier billing services have been identified as a massive growth opportunity worldwide, with Fortumo vice president of global business development and sales flagging the “unprecedented reach” of mobile billing – which, he noted, “provides merchants with a way to acquire, monetize and retain more users”.
Asia-Pacific mobile users represented an average monthly revenue per user (ARPU) of $US5.90 ($A7.60) in 2017, behind Western Europe’s $US12.70 ($A16.32) ARPU and the $US10 ($A12.85) ARPU in the fast-growing Latin America market.
Carrier billing accounted for 13.6 percent of digital gaming revenues in Western Europe, 17.4 percent in the Asia-Pacific region, and 20.9 percent in Central & Eastern Europe, according to SuperData Research figures cited by Fortuno.
Telstra will continue to offer billing for content from certain partners such as the AFL, Apple App Store, Apple Music, BigPond Movies, Google Plan, Netflix, Sensis, and more.
Consumers who believe they have been incorrectly charged under the PDB scheme should contact Telstra on 132 200 or through this page.