POST Online Media Lite Edition


Telstra in court over unconscionable sales to Indigenous consumers

Christian Fernsby |
The ACCC has instituted Federal Court proceedings against Telstra for admitted unconscionable conduct in the sale of post paid mobile products to Indigenous consumers.

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Telstra has admitted it breached Australian Consumer Law and acted unconscionably when sales staff at five licensed Telstra branded stores signed up 108 Indigenous consumers to multiple post paid mobile contracts which they did not understand and could not afford between January 2016 to August 2018.

In each case, these contracts were entered into with individual consumers on a single day when they visited a store.

Telstra has admitted that staff at five stores in the Northern Territory, South Australia and Western Australia used unfair selling tactics and took advantage of a substantially stronger bargaining position when selling post paid mobile products on behalf of Telstra.

Many of the consumers spoke English as a second or third language, had difficulties understanding Telstra’s written contracts, and many were unemployed and relied on government benefits or pensions as the primary source of their limited income. Some lived in remote areas where Telstra provided the only mobile network.

In some cases, sales staff at the Telstra licensed stores did not provide a full and proper explanation of consumer’s financial exposure under the contracts and, in some cases, falsely represented that consumers were receiving products for 'free'.

In many instances, sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment could enter into post paid mobile contracts. This included falsely indicating that a consumer was employed.

Telstra’s board and senior executives were unaware of the improper sales practices when they occurred, and Telstra has acknowledged that it had no effective systems in place to detect or prevent this type of conduct.

Telstra has agreed to the filing of consent orders and joint submissions in Court in support of penalties totalling $50 million being imposed by the Court. It is a matter for the Court to decide whether these penalties are appropriate. If imposed by the Court, the penalties would be the second highest total penalties ever imposed under Australian Consumer Law.

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