The ‘David and Goliath’ battle behind Telstra’s huge ACCC fine over its treatment of Indigenous customers
David and Goliath #DavidandGoliath
Sitting on her favourite beach in her hometown of Broome, Caitlyn Roe is a world away from Melbourne’s Federal Court.
In that courtroom on Thursday, the country’s largest telco was slapped with a $50 million fine — one of the most significant penalties in Australian corporate history.
The decision came after weeks considering evidence put forward by Telstra and the consumer watchdog, in a case described as “outrageous” by those involved.
The court heard 108 examples of Indigenous Telstra customers being pushed into phone plans they couldn’t afford, only to be hit with huge bills and in many cases, chased by debt collectors.
Caitlyn’s story was one of the 108 — a story that helped trigger an investigation by a group of financial counsellors working in different parts of the country and eventually exposed systemic mis-selling by Telstra at five stores.
The judgement closes an ugly chapter for the telco giant, one where it admitted sales staff put commissions above the needs of vulnerable customers.
This is how it happened.
Caitlyn Roe offered to pay off her debts a few hundred dollars at a time, but the local store would not accept that.(
ABC News: Andrew Seabourne
) Young mum chased by debt collectors
Caitlyn’s story has a simple beginning: about three years ago, she walked into Broome’s Telstra shop and was convinced to swap from a pre-paid phone to a plan.
Within months, that plan turned into a bill worth almost $2,200, and her efforts to negotiate a payment plan with the telco were failing.
“They wanted that full amount — right or wrong, they wanted it,” she said. “I was like, ‘Jesus, I’m battling to put away money for food and bills’.”
Caitlyn, now 23 years old, is from a proud family.
The young mother of two is used to sorting out her own problems, and the thought of asking for help filled her with shame.
But the stress of the bill had become almost unbearable. She was being chased by debt collectors and felt compelled to act to set an example for her young daughter, who was just two at the time.
So she opened the door to the office of a local financial counselling firm, where she soon joined forces with Trudi Ridge.
Trudi Ridge said Caitlyn showed others in the community there was no shame in coming forward. (
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“What Caitlyn did was amazing,” Ms Ridge, a Karajarri Yawuru traditional owner and financial capability worker, said.
“She just stood up and [said] ‘just own it, accept that this is what’s happened, go and get help’.”
Huge bills meant people couldn’t afford food or fuel
Ms Ridge spent 13 years working in various government departments, as well as the Australian Chamber of Commerce and Industry, in Canberra.
Despite her experience, she said at first the problem with Telstra in Broome wasn’t obvious.
Trudi Ridge said some people found it difficult to admit they were having financial problems.(
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“A lot of people were [coming] to me because they couldn’t buy food, or they couldn’t get fuel for their car, or they couldn’t pay their electricity or their water bill,” she said.
“And after discussions you find out there’s a $5,000 to $6,000 Telstra bill sitting there.”
She said it was difficult for people in a small community to speak up and admit they were having financial difficulties.
“When you’ve got big debt like that you just hide it. You can have supper at someone else’s house so that you’ve got a feed for that night or for that week for your kids.”
Customers at the Broome store were not told about data charges.(
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In a region where Telstra is the only option for decent phone reception, she said it was easy for the store to sell contracts.
“The reason people would sign up is because they had no idea what they were signing up to,” Ms Ridge said.
From a trickle to a flood as more cases emerge
By the time Caitlyn met financial counsellor Alan Gray, who worked with Trudi, he’d noticed many of his clients were also customers of the Telstra store just a few hundred metres down the road.
When Caitlyn met Alan Gray, he was already trying to help many others with Telstra debt.(
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“There was a recurring pattern,” he said.
“All they wanted was a $50 flip phone or to get their cheap phone repaired.
“But they [Telstra] would say [things like]: ‘here, you can walk out today with a new smartphone, a new tablet and boom box speakers’ and people go, ‘wow’ and so they’d sign.”
By early 2018, Alan had a list of more than 20 clients who were struggling to pay for products and services they were told were free.
How did the massive bills happen?
After months of calling and writing to Telstra, he managed to get the telco to agree to waive the debts of the handful of people in Broome he knew about, and allow them to keep their phones.
But that wasn’t the end of it.
“Initially I just assumed it was a Broome problem — I thought it was one rogue store,” he said.
“It never occurred to me that Telstra was ripping off Indigenous customers in other outback areas as well.”
That bombshell came when Alan bumped into another financial counsellor from the remote APY Lands in South Australia, at a national conference in Hobart.
“She told me that exactly the same problem was happening through the APY Lands,” he said.
The woman told Alan he needed to talk to Carolyn Cartwright. He did.
And they both soon figured out there was a major issue that criss-crossed the country.
List of people with huge Telstra mobile bills grows
Carolyn works for financial counselling service MoneyMob and had also become increasingly concerned about the Telstra bills she was seeing among her clients.
Moneymob’s Carolyn Cartwright spent years trying to help clients who were dealing with Telstra.(
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Carolyn and her colleagues began complaining about Telstra’s sales practices as early as August 2017, to both the Telecommunication Industry Ombudsman (TIO) and the company itself.
MoneyMob secured a grant from the Australian Securities and Investments Commission to hire a community worker to run education sessions about phone contracts in remote communities.
It was then they realised it was a national problem.
“[We] just started to see client after client with a huge mobile phone bill and it became evident that there was a pattern,” she said.
According to an agreed statement of facts presented to the court, the TIO first raised issues with Telstra as early as 2016 — and again in 2017 — about sales staff selling contracts to customers without properly assessing their financial credentials.
This is around the same time that Caitlyn was sold her plan in Broome.
Multiple customers at the Broome store were sold plans they did not understand and could not afford.(
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By mid-2018, after the Hobart conference, Alan and Carolyn had teamed up with others around the country to start documenting how widespread the problem was.
One of the counsellors involved was Darwin-based Toni Cork.
“Very quickly there were more than 100 client names on that list,” Ms Cork said.
Financial counsellor Toni Cork was shocked when she realised the extent of the Telstra debt problems.(
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The list, which de-identified the clients for their own privacy, grew to more than 230.
The customers had Telstra bills totalling more than $1 million. The team of financial counsellors, working alongside community groups and Aboriginal organisations, found sales staff in some franchise stores were being financially rewarded for selling expensive plans.
“The people working at stores had high incentives [through commissions] to sell as many products as they could and sell as many high-end plans as they could,” she said.
Telstra is the only option for many in the Northern Territory, as coverage can be patchy outside of Darwin.(
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According to court documents, in late 2017 Telstra’s chief risk office (CRO) began reporting to local, regional and state managers in the Northern Territory, Western Australia and South Australia about the issue.
The reports said staff in specific stores were manipulating credit checks to sell expensive phone plans to Indigenous customers.
While the CRO recommended clawing back incentives and changing Telstra’s systems, there was no mention of how the company would help the people who’d signed those contracts.
Back in Broome, Caitlyn was receiving intimidating legal letters from debt collectors — despite Alan working to get Telstra to waive his clients’ debts.
“I thought I was going to go to jail,” she said.
“It put me in a big, dark place I didn’t really want to be.”
Caitlyn said her ballooning debt with Telstra sent her to a “dark place”.(
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) A long, difficult investigation in remote parts of Australia
The financial counsellors continued to work together and raise complaints with Telstra and the consumer watchdog, and they started getting dozens of debts waived.
In August 2018, the Australian Competition and Consumer Commission (ACCC) decided to investigate.
But pinning down Telstra stores for their unconscionable practices wasn’t easy. Most of the affected customers lived in remote areas and spoke English as their second, third or fourth language.
The ACCC began with the financial counsellors’ spreadsheet, outlining the list of clients they believed were sold unfair contracts.
Over the next 18 months, ACCC investigators flew in from their city offices to meet those affected, often with the financial counsellors joining them on the long journey out to the remote communities.
ACCC Commissioner Sarah Court said the investigators were concerned by what they were hearing.
ACCC Commissioner Sarah Court said the investigation involved logistical challenges.(
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“We [felt] the anger and frustration from the support services and the financial counsellors on the ground who were seeing firsthand the enormous distress,” Ms Court said.
“But from the consumers themselves, I think it was almost more a [feeling of] shame or an embarrassment that somehow these enormous bills had been generated.”
As the ACCC investigated, Toni Cork said Telstra executives started getting in touch with her team in Darwin.
“We did get a lot of Telstra bigwigs coming up and introducing themselves and talking to us about what was going on and what they were putting in place and to personally sort of apologise and thank us,” she said.
Telstra has introduced a number of initiatives aiming to stop the problem of mis-selling.(
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In March 2019 — six months after launching its investigation — the ACCC wrote to Telstra to officially inform the company of its inquiry.
The ACCC reviewed 600,000 documents.
“We were able to forensically identify particular consumers that had been affected by this mis-selling conduct, and we then went back to those consumers,” she said.
By then, Telstra had begun a number of initiatives to help the affected customers, including waiving some customer debts, launching simplified plans and creating a point of contact for financial counsellors.
Systemic exploitation identified at five stores
After months of investigating, ACCC confirmed what the financial counsellors suspected all along: Telstra staff were manipulating credit checks to get customers on Centrelink approved for huge plans.
There were examples of stores selling multiple contracts to single customers, telling people that they would receive devices for free when that wasn’t the case, and passing on debts to debt collectors, even after Telstra became aware of what was happening.
There was one example of debt collectors pursuing a homeless person who was caring for children, over an unpaid phone plan.
The ACCC narrowed down the systemic problems to five stores: the Casuarina and Palmerston outlets in Darwin, and stores in Broome, Alice Springs and Arndale, in Adelaide.
Telstra said its board and chief executive were not aware of the extent of the problem, despite court documents showing multiple meetings between the company’s leadership and financial counsellors about the issue at the time.
An Aboriginal man on his phone in Alice Springs, March 26, 2021.(
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The investigation documented 108 cases of unconscionable conduct towards Indigenous Telstra customers, which it would present to court.
In November 2020, Telstra and the ACCC formally agreed that $50 million was a fair penalty.
The ACCC agreed to the amount after taking into account Telstra’s cooperation and its efforts to fix the problems, including a remediation program for people who’d been mis-sold plans.
The Telstra-branded store in Casuarina, Darwin was one of the five with systemic issues.(
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“The remediation program will provide consumers with full refunds, including interest, waive any remaining outstanding debts and allow consumers to keep devices obtained under the relevant contracts,” the court was told.
The company has agreed to other measures, including establishing an Indigenous helpline.
Counsellors say affected customers should see compensation
The $50 million fine, which represents a fraction of Telstra’s $1.8 billion net profit after tax last financial year, will go into general government revenue, as all ACCC penalties do.
Carolyn Cartwright said it was “disappointing” that none of the agencies that did the legwork were likely to benefit from it.
“It’s kind of been a bit of a David and Goliath story,” she said.
“I’m quite proud of what we’ve been able to pull together and achieve, but it just makes you wonder what else is out there that if we had the resources [to look].”
For Alan Gray, one irritation that remains is a lack of compensation for the harm and stress caused to the customers affected.
From his home office in Broome, Alan Gray is determined to continue to fight for customers.(
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“The enormous stress and worry that this unconscionable conduct had on people right through the outback — it’s hard to imagine unless you’re sitting with them.”
The NT government has also urged the federal government to use the fine to help those affected.
“Telstra is being fined $50 million for misleading vulnerable Indigenous customers but those customers get nothing from this? It just doesn’t pass the pub test,” NT Minister for Digital Development Paul Kirby said.
‘I don’t think we dug deep enough’: Telstra apologises
The ACCC conceded what was put before the court does not necessarily represent the whole problem.
“I suspect that we will continue to find examples of this from other carriers in other areas and we are continuing to look very closely at those complaints,” Ms Court said.
She said others may be entitled to refunds because of the case and the telco was required to get the word out with posters and on community radio.
Telstra’s chief executive Andy Penn said the company had made changes to reduce the risk of something like this happening again.
He admitted the telco could have done more to fix the problem but denied the company had shown arrogance towards those raising complaints as far back as 2017.
“We certainly did look into the stores that were showing a higher default rate on repayments than other stores,” he said.
“‘There’s about 50,000 instances a year where customers sign up for a plan and never make a payment, so that does happen, but in this circumstance it was clearly a consequence of mis-selling and I don’t think we dug deep enough to understand that.”
Case could be the ‘tip of the iceberg’
Back in Broome where it all began, Trudi Ridge said while Telstra had made a good start, the company needed to do more to communicate with Indigenous Australians.
She believed the case was the “tip of the iceberg”.
“There’s still people who are too scared to come forward and who still don’t quite understand what’s going on,” she said
For Caitlyn, she feels proud of the part she played in holding the telco to account.
Caitlyn Roe spoke out in 2019, for the sake of her young family.(
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“I don’t want my kids growing up knowing that they’ve been ripped off and they don’t how to look for the help, when they know there is help,” she said.
And she has a final message for Telstra:
“Don’t take advantage of people,” she said. “Because there’s someone out there that will speak up”.