The Federal Court is ordering Telstra to pay penalties for charging up to 100,000 mobile customers for third-party content without their consent.
This order comes a month after the ACCC commenced proceedings against Telstra, under a delegation of power from ASIC, and has resulted in a hefty $10 million fine.
Telstra has admitted to misleading customers, charging up to 100,000 people for signing up to ringtone, gaming, or other digital content subscriptions without payment details or identity verification taking place.
There's gonna be a whole lot of refunds going out for this.
Some unfortunate Telstra customers were signed up to its Premium Direct Billing (PDB) service by default, and automatically had extra charges added to their bills. Customers didn't have to enter any payment details or even confirm their identities for these charges to be applied.
The Federal Court found that Telstra had breached the ASIC Act and misled customers when it charged them for this digital content, such as games and ringtones, which were unknowingly purchased.
According to the ACCC, between 2015 and 2016, "Telstra did not adequately inform customers it had set the Premium Direct Billing service as a default on their mobile accounts. If customers accessed content through this service, even unintentionally, they were billed directly by Telstra."
When customers contacted Telstra to complain about the billing issue, they were directed to third parties, despite Telstra knowing that customers had difficulty getting a refund from third party suppliers, or cancelling their subscription.
$10 million is a big fine, but between July 2013 and October 2017 Telstra earned roughly $61.7 million in net revenue from commissions on premium billing services charged to more than 2.7 million mobile numbers.
"By introducing and operating the Premium Direct Billing service, Telstra generated substantial profits by exposing customers to unauthorised charges,” ACCC Chairman Rod Sims said.
"Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone. The $10 million penalty imposed by the Court recognises the seriousness of Telstra’s conduct. In the ACCC's view, such conduct falls below community expectations for appropriate corporate behaviour," Mr Sims said.
As part of the resolution agreement, Telstra has ceased the operation of the PDB service and will refund all affected customers. The telco giant estimates that it has already provided around $5 million of refunds to its customers.
If you're a Telstra customer and you think you may have been affected by unauthorised payments, check your bills and contact Telstra to seek a refund.
This decision by the Federal Court was handed down on the same day as its ruling on Ford, who were also fined $10 million for inadequately responding to customers who had complained about issues concerning Fiesta, Focus and EcoSport vehicles.
Today the Federal Court declared that Ford will pay $10 million in penalties, by consent, after failing to adequately respond to customer complaints about Fiesta, Focus and EcoSport vehicles fitted with PowerShift transmission between 1 May 2015 and 29 February 2016.