Telstra fined $50m for ‘unconscionable’ sales

Telstra must pay $50 million for the conduct of sales representatives in regional Australia. Image: Shutterstock

The Federal Court has fined Telstra $50 million plus costs for selling mobile phone contracts to First Nations people in remote communities who could not afford the plans and did not fully understand the written contracts.

Telstra admitted the conduct of its salespeople in five regional stores was “unconscionable” and had agreed to pay penalties of $50 million in November last year when the Australian Competition and Consumer Commission (ACCC) launched the Federal Court proceedings.

On Thursday, Justice Deborah Mortimer agreed that the $50 million penalty – the second-largest handed down under Australian Consumer Law – was appropriate.

Peter Gartlan from Financial Counselling Australia told ABC News 24 Telstra’s conduct was “nothing short of outrageous”.

“The products themselves were extremely expensive,” he said.

“We saw cases as high as $19,000 but on average the cases involved debts as much as $80,000.

“This is for a mobile phone product that you and I would normally pay $60 a month.”

Telstra signed up 108 First Nations customers at stores in the Northern Territory, South Australia, and Western Australia between January 2016 and August 2018.

Sales staff did not ensure their customers, many of whom spoke English as a second or third language, understood the contracts they were entering into.

Credit assessments had also been manipulated.

In one instance, Telstra listed a person’s employer as ‘Centrelink’ on the credit check when in fact the person had been receiving Centrelink benefits for more than two decades.

The court was also told of a person who dipped into their superannuation to pay the debt in fear of going to prison if it were not paid.

ACCC Chair Rod Sims said Telstra exploited “the social, language, literary and cultural vulnerabilities” of those First Nations customers.

“Telstra’s board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them,” Sims said in a statement on Thursday.

“We expect much better behaviour from large businesses like Telstra, but all businesses in Australia have a responsibility to ensure sales staff are not breaching consumer law by manipulating or tricking consumers into buying products or services they do not need or cannot afford.”

Telstra CEO Andy Penn said the company is continuing to offer remediation to any customers who still have not come forward about being affected by the disgraceful sales conduct.

It now has a dedicated hotline to support First Nations customers and has made cultural awareness training mandatory for Telstra staff who engage with First Nations customers.

“I want to apologise to all of the Indigenous customers affected by this,” Penn said in a statement. “I am deeply and personally disappointed that we have let you down.

“We should have listened more carefully. We should have been more attuned to what was happening.

“We should have picked this up earlier.”