Telstra fined AUD10mn over 'misleading' premium billing charges

27 Apr 2018

Australia’s Federal Court has ordered Telstra to pay a fine of AUD10 million (USD7.6 million) for making ‘false or misleading representations to customers in relation to its third-party billing service’ known as ‘Premium Direct Billing’ (‘PDB’). Following action taken by the Australian Competition and Consumer Commission (ACCC), the court has ruled that Telstra misled customers and breached the Australian Securities and Investments Commission (ASIC) Act when it charged them for digital content, such as games and ringtones, which they unknowingly purchased. The Federal Court has determined that in 2015 and 2016 Telstra did not adequately inform customers it had set the PDB service as a default on their mobile accounts. The telco admitted that more than 100,000 customers may have been affected and will be offered refunds if so, and it has ceased operating the PDB service entirely. It was noted that Telstra has already provided refunds of at least AUD5 million, while the ACCC estimates further refunds ‘may be in the order of several million dollars’.

ACCC chairman Rod Sims said of the matter: ‘Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity. By introducing and operating the [PDB] service, Telstra generated substantial profits by exposing customers to unauthorised charges … The AUD10 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.’