Telstra has been fined $10 million for potentially selling ringtones and gaming content to up to 100,000 people without their knowledge.
Australia’s biggest telco admitted in federal court that in 2015 and 2016, it set its third party Premium Direct Billing service to default for up to 100,000 mobile accounts.
If customers accessed content through that service, they were billed directly by Telstra.
The regulator, the Australian Competition and Consumer Commission (ACCC), took Telstra to court for misleading customers and breaching the ASIC Act.
“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 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.”
Telstra says it has already paid $5 million in refunds and will discontinue the service immediately.
It will provide further refunds in cases where customers had bought Premium Direct Billing content without their knowledge, and will contact other customers who had already complained to the Telecommunications Industry Ombudsman or to Telstra in the past and had not received refunds.
Sims said the ACCC was now examining the third party billing services offered by other carriers and “will not hesitate to take enforcement action if we believe they are breaching the law”.
A spokesperson for Telstra told Business Insider Federal Court judgment came after both the ACCC and Telstra jointly submitted that Telstra pay a penalty over the issue in March this year.
“Today’s judgment is in line with this joint submission,” they said.
“PDB services have been recognised as an issue for the broader telecommunications industry and while we took a number of steps to improve our processes we acknowledge we could have done more and done it faster.
“We stopped providing new subscription-based services like these in December, and completely exited the service from 3 March this year.”
The spokesperson said Telstra had a dedicated team contacting many of the customers involved to apologise and to offer refunds.
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