Telstra agreed to pay $ 50m in compensation after the telecommunication giant agreed to use “unfair marketing tactics” and use language and cultural barriers to register more than 100 indigenous people for mobile phone contracts, which sometimes resulted in a $ 19,000 debt.
Australian Competition And Consumer Commission
On Thursday, the Australian Competition and Consumer Commission announced that it had begun filing a lawsuit against Telstra, alleging that the company had violated consumer law and acted “unreasonably” by signing 108 indigenous people to pay for mobile contracts “without understanding and without money”.
According to the ACCC, between January 2016 and August 2018 workers in five locations in the Northern Territory, South Australia and Western Australia used “improper marketing tactics” to sign people with contracts that resulted in them having an estimated debt of more than $ 7,400.
In some cases, people who have signed contracts live in remote areas where Telstra has only provided the available network and the ACCC alleges that sales personnel use the opportunity for “strong negotiation”.
Linguistic Barrier
Many customers who spoke English as a second or third language, had difficulty understanding Telstra’s written contracts, or were “unemployed and relying on government benefits or pensions as their main source of unlimited income”.
The ACCC further states that in some cases, Telstra retailers did not provide “a complete and proper explanation of [the consumer’s] financial exposure under contracts” and, in some cases, “falsely claimed that consumers received free products”.
In one case, a Telstra client incurred a $ 19,000 debt, while another reported that he was “extremely worried about going to jail if he didn’t pay”.
A third customer used the money from his superannuation to pay off Telstra’s debt.
“In many cases, retailers also use credit card testing, so consumers who may have failed their credit tests may enter into prepaid mobile phone contracts. This includes falsely claiming that the buyer is being hired, ”said the ACCC.
Telstra To Pay One Of The Highest Fines Ever
While the case is pending in court, Telstra has admitted to violating consumer law and “unreasonable conduct”. In a joint statement to the state court and the ACCC, the company said it supported fines “estimated at $ 50m”.
If the court agrees, fines will be the second highest fines ever imposed under Australian Consumer Law.
“This case reveals a very serious misconduct that used to endanger the community, language, learning and learning and the vulnerability of these traditional users,” said ACCC chairman, Rod Sims.
“While Telstra became increasingly aware of the unscrupulous practices of retailers in Telstra’s licensed stores over time, it failed to act quickly enough to curb them, and these practices continued to cause further, worse and inevitable financial difficulties for Indigenous consumers.”
The ACCC said Telstra had taken steps to reduce debt, repay debts and put in place measures to reduce the risk of similar misconduct in the future.
