Telecom giant Optus has agreed to pay a $100 million penalty for selling customers phones and contracts they didn’t want or need, following court action brought by Australia’s consumer watchdog.
According to the Australian Competition and Consumer Commission (ACCC), many of the affected Optus consumers were vulnerable or experiencing disadvantage such as living with a mental disability, being unemployed, or having English as a second language.
Many were First Nations Australians from regional, remote and very remote parts of Australia, it said.
Optus has admitted that its sales staff acted unconscionably when selling phones and contracts to over 400 consumers at 16 different stores across Australia between August 2019 and July 2023.
Examples of the misconduct included putting undue pressure to buy a large number of products like phones and accessories; not considering if the consumers had Optus coverage where they lived; and misleading consumers to believe goods were free or part of a bundle at no extra charge, per the ACCC.
Optus chief Stephen Rue said the misconduct was inexcusable and unacceptable.
“I would like to sincerely apologise to all customers affected by the misconduct in some of our stores,” Rue said in a statement on Wednesday.
“Optus failed these customers, and the company should have acted more quickly when the misconduct was first reported.
“I am leading the implementation of extensive changes across the company with active responses to the issues raised well underway.
“However, there is much more to do as we work to regain our customers’ trust and improve support and protections for them, especially for those who are vulnerable.”
Rue said a number of executive and senior leadership changes have been made, and disciplinary action has been taken in some circumstances. This included terminating retail sales staff who were found to be responsible for inappropriate sales practices.
“This is not what Optus stands for and we will hold ourselves to a higher standard going forward,” he said.
As part of an agreement announced on Wednesday, the ACCC and Optus will jointly ask the Federal Court to impose a total penalty of $100 million on Optus for breaching the Australian Consumer Law.
“It is a matter for the Court to decide whether the penalty is appropriate and to make other orders,” the ACCC stated.
Along with the fine, Optus has signed an undertaking to compensate impacted consumers and improve its internal systems.
“Impacted customers are receiving refunds as part of a remediation approach which is informed by financial counsellors and industry partners to make sure it is fair and reasonable,” it said.
It has committed to review its complaint handling and staff training, including changing the remuneration structure of sales staff to disincentivise them from engaging in similar conduct.
Plus, Optus has agreed to pay $1 million to support digital literacy initiatives for First Nations Australians.
ACCC deputy chair Catriona Lowe described the telecommunication company’s conduct as “simply unacceptable”.
“Many of these consumers who were vulnerable or experiencing disadvantage also experienced significant financial harm. They accrued thousands of dollars of unexpected debt and some were pursued by debt collectors, in some instances for years,” she said in a statement.
“It is not surprising, and indeed could and should have been anticipated, that this conduct caused many of these people significant emotional distress and fear.”
“We are particularly concerned that Optus engaged debt collectors to pursue some of these consumers after it had launched internal investigations into the sales conduct.”
At the Mount Isa store, which has now closed, the ACCC said Optus pursued debts in cases where senior management knew the contracts might have been created without the affected customers’ knowledge.
Most of these customers were First Nations Australians from Mount Isa and the Northern Territory, it said.
The ACCC commenced court action against Optus back in October 2024, with the investigation prompted by a referral from the Telecommunications Industry Ombudsman.
Lead image: Getty
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