Telstra has been handed an $18 million fine and ordered to pay back affected consumers after moving thousands of customers of its lower cost brand Belong to a slower NBN plan without informing them.
The Federal Court confirmed the penalty on Friday following legal action by the Australian Competition and Consumer Commission (ACCC), after the court found in February that Australia’s largest telecommunications provider had made false or misleading representations to almost 9,000 Belong customers.
Those 8,897 consumers were quietly moved in late 2020 from an NBN plan with a maximum upload speed of 40 Mbps to a plan with a maximum upload speed of only 20 Mbps — while their 100 Mbps maximum download speed remained unchanged.
Telstra had continued to represent the plan as having a 40 Mbps maximum upload speed despite that not being the case, the court previously found.
The new speed tier with a slower maximum upload speed would have cost Belong $7 less per month to supply on a wholesale level, according to the ACCC.
While Telstra already notified more than 2,500 Belong customers about the issue in 2021, it is still working through more than 6,000 others.
The company will have to pay all affected customers $15 for each month they were on the lower upload speed plan, for a total remediation of more than $2.3 million — on top of its $18 million penalty.
The Federal Court also ordered Telstra to pay some of the ACCC’s undisclosed legal costs.
Telstra admits it ‘should have notified customers’
Telstra said it accepted the court’s findings and admitted, “We should have notified customers about the changes to their services and we’re sorry we let them down.”
“We’ve taken a number of steps to make things right,” a spokesperson told Information Age in a statement.
“We’ve completed remediation for one group of impacted customers and are well underway with the other.
“We have contacted all affected customers – whether they’re still with us or not – to ensure they have an opportunity to access remediation.”
Thousands of Belong customers were quietly moved onto a slower NBN plan in late 2020. Image: Telstra / YouTube
Telstra has entered an enforceable undertaking with the ACCC to remediate 6,112 remaining customers who signed up to the Belong Premium Plan between 20 September 2018 and October 2020.
“We’re focused on doing better for our customers, and we've worked hard to strengthen our compliance processes and practices,” the company added.
Penalty sends ‘strong message to all businesses’
ACCC Commissioner Anna Brakey said Telstra had denied Belong customers the chance to decide if the new plan was right for them, by failing to inform them of the speed change.
She said the telco's $18 million penalty would send “a strong message to all businesses that they cannot mislead consumers by making changes to key aspects of a service without informing customers of those changes”.
“Misleading pricing and claims in relation to essential services, with a particular focus on telecommunications, is one of ACCC’s current enforcement priorities,” she said.
The regulator first commenced court action against Telstra over the issue in December 2022.
The telco was previously ordered to pay $15 million in 2022 for making misleading statements about its maximum NBN speeds, and also offered to compensate 42,000 customers for slow speeds in 2017.
