Telstra has been fined $10 million for misleading conduct over third-party billing service that unknowingly charged up to 100,000 customer for games, videos and ringtones.
Consumer watchdog the ACCC launched the action over the provider, “Premium Direct Billing” (PDB), which led to tens of thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without entering payment details or verifying their identity.
Telstra was found to have misled customers and breached the ASIC Act when it charged them for digital content from PDB.
The Court found that in 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.
ACCC Chairman Rod Sims said Telstra generated substantial profits by exposing customers to unauthorised charges from
Premium Direct Billing service.
“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, Sims said.
“In the ACCC’s view, such conduct falls below community expectations for appropriate corporate behaviour.”
Telstra has ceased operating the PDB service and will refund affected customers.
Telstra estimates it has provided refunds of at least $5 million, and it will review any future complaints.
The ACCC estimates several million dollars worth of refunds may still be owing.
The consumer watchdog is is now checking the third party billing services offered by other carriers for potential breaches.
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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