Australia’s consumer watchdog is suing Optus, accusing the telecommunications giant of engaging in “unconscionable conduct” by selling products and services to hundreds of vulnerable consumers “which they did not need, did not want and could not afford”.
The Australian Competition and Consumer Commission (ACCC) announced the Federal Court proceedings on Thursday.
It alleged many of the targeted consumers were First Nations Australians from regional and remote areas, from culturally and linguistically diverse backgrounds, were unemployed, or lived with a mental disability or limited cognitive abilities.
Optus staff put “undue pressure on some of these consumers to purchase a large number of products, including expensive phones and accessories, and not undertaking coverage checks to inform the consumer whether they would have Optus coverage where they lived”, the ACCC alleged.
One example provided by the regulator referenced “a person living with an intellectual disability which impacts their ability to speak and understand financial matters”, who the commission alleged was sold “an expensive phone, a business phone contract under a false ABN, a new NBN internet plan and accessories”.
“The person did not want or need the majority of these items, and was upset and embarrassed about the unwanted and expensive items they were sold,” the ACCC said.
“When the person’s representative went to the store to return the items, the Optus staff refused to cancel the contracts and it was only through the intervention of a financial counsellor that Optus cancelled the contracts.”
Optus staff ‘incentivised’ by commissions
ACCC Chair Gina Cass-Gottlieb said the commission alleged the practices which involved around 429 customers were “incentivised by the commission-based remuneration for sales staff”.
“We also allege that Optus’ unconscionable conduct continued after management became aware of deficiencies in its systems that were being exploited by sales staff, and despite this, failed to implement fixes,” she said.
The conduct was alleged to have affected 363 consumers from two Optus stores in Darwin in the Northern Territory, 42 from the company’s Mount Isa store in Queensland, and 24 from other stores around Australia.
Many of the affected consumers suffered financial harm as well as “shame, embarrassment, stress and emotional distress over how they would pay their debts to Optus”, the ACCC alleged.
The commission also alleged Optus often took “long periods of time” to remedy staff conduct, and took back commissions paid to staff and franchisees following inappropriate practices “but did not take steps to remediate the consumer” in some instances.
The ACCC called for Optus to pay penalties, provide consumers with redress, and take part in a compliance program.
The court action comes after the Telecommunications Industry Ombudsman (TIO) referred investigative findings about Optus to the ACCC three times between 2022 and 2024.
Ombudsman Cynthia Gebert described the alleged actions unearthed during the TIO’s investigations as “deeply troubling”.
ACCC Chair Gina Cass-Gottlieb says commissions incentivised Optus staff to sell products to customers who did not need or could not afford them. Image: ABC News / YouTube
Optus says some staff were sacked
Optus’ interim CEO Michael Venter, who took over when Kelly Bayer Rosmarin resigned following the telco's major network outage in November 2023, said the company had fired some staff “whom we determined were responsible for this misconduct”.
“Optus does not tolerate employee behaviour which takes advantage of customers,” Venter said in a statement.
“We are remediating affected customers including by providing refunds, waiving outstanding debts and enabling them to keep devices.
“We regret that we did not remediate more quickly in some of these cases.”
Venter said Optus apologised to affected customers and the company regretted the instances where it failed to meet its customer service standards.
“The misconduct alleged by the ACCC is unacceptable, and completely out of step with our company values and we accept that we need to protect all customers, including those experiencing vulnerability, from this type of behaviour,” he said.
Optus had undertaken “a major review” of how it managed sales to vulnerable customers over the past three years, Venter said.
“We are in the process of appointing a customer advocate in a new role to work alongside our partners, community groups, financial counsellors and our customer teams to focus specifically on improving our support for customers in need,” he said.
Consumer group wants more regulation
The Australian Communications Consumer Action Network (ACCAN), which represents telco customers, said the allegations put forward by the ACCC highlighted “grave abuses” of consumers’ trust.
It said Optus’ alleged misconduct appeared to be “even more egregious” than that of Telstra, which was fined $50 million in 2021 for selling mobile phone contracts to First Nations people who could not afford them.
ACCAN CEO Carol Bennett called on Communications Minister Michelle Rowland to reform the industry to prevent similar alleged misconduct from occurring again.
“What is alleged simply cannot be allowed to occur in this country and requires decisive action from government,” Bennett said.
“The lack of action from the regulator ACMA [Australian Communications and Media Authority] in this instance once again demonstrates that there is a need for significant reforms to strengthen the enforcement powers and penalties at its disposal.
“The current communications consumer protections regime enables the ACMA to act where deficiencies exist in the voluntary industry codes."
ACMA said it declined to comment because the matter was before the court.
The TIO’s latest annual report, which covered the 2023-24 financial year, noted that overall complaints about telcos were down 14.6 per cent on the previous year.
