Telstra fined $10M for charging unknowing customers content

By @chelean on
A Telstra logo adorns a phone booth in the central business district (CBD) of Sydney in Australia, February 13, 2018. Picture taken February 13, 2018.
A Telstra logo adorns a phone booth in the central business district (CBD) of Sydney in Australia, February 13, 2018. Picture taken February 13, 2018. Reuters/David Gray

Telstra was ordered to pay $10 million in penalties for charging customers content they did not want on Wednesday. The Federal Court said Australia’s largest telco made false or misleading representations to customers in relation to its third-party billing service called Premium Direct Billing (PDB).

The Court found that Telstra charged customers for digital content, such as games and ringtones, that they were not aware they had purchased. The company therefore breached the Australian Securities and Investments Commissions 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 expectations for appropriate corporate behaviour.”

Sims added that the ACCC was now examining third party billing services offered by other carriers.

Last month, the company admitted that there were issues with its PDB service. It agreed to offer refund to over 100,000 customers who unknowingly paid for PDB subscription in 2015 and 2016. It estimated it had already provided at least $5 million in refunds.

Telstra had earned around $61.7 million from the PDB service until October 2017. It announced last year that it would cease PDB from March 3.