Optus has agreed to pay a $100m penalty after conceding it engaged in unconscionable conduct when selling phones and contracts to hundreds of customers that could not afford them, did not want them, or didn’t even have coverage to use them.
The negotiated penalty, if approved by a federal court judge, came after court action taken against Optus by the consumer regulator. If imposed, it would be the largest ever for the telco sector.
The Optus chief executive, Stephen Rue, said the misconduct was inexcusable.
“I would like to sincerely apologise to all customers affected by the misconduct in some of our stores,” Rue said.
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“Optus failed these customers and the company should have acted more quickly when the misconduct was first reported.”
The Australian Competition and Consumer Commission (ACCC) said many of the affected consumers were vulnerable, and were living with a mental disability or diminished cognitive capacity. Some were unemployed, or had language barriers.
In one example provided by the ACCC, an Indigenous Australian, who speaks English as a second language and lives in a remote community with no Optus coverage, was approached by the telco’s staff outside a store and pressured to enter.
The person thought Optus was offering them a free phone and felt pressured to accept.
They ended up being contracted to two high-end phones, three phone plans, and various services and accessories with a total minimum cost of $3,808 over 24 months.
Shortly after, they were signed up to a second phone plan with a further $540 minimum spend.
Unable to pay, the person had their debt referred to debt collectors.
The ACCC said unconscionable conduct at Optus affected more than 400 consumers at 16 stores across Australia between 2019 and 2023, and involved:
putting pressure on consumers to buy a large number of products they did not want or need, could not use or could not afford;
failing to explain relevant conditions to vulnerable consumers, resulting in them not understanding ongoing payment obligations;
ignoring whether customers had Optus coverage where they lived.
The ACCC deputy chair, Catriona Lowe, said that some vulnerable customers were pursued by debt collectors for years.
“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,” Lowe said.
As part of the agreement reached with the regulator, Optus has signed an undertaking to compensate impacted consumers and improve its internal systems.
The telco has said internal disciplinary action had been taken and that the sales staff responsible had lost their jobs.
The industry body, Financial Counselling Australia, said sales commissions at Optus stores drove “predatory practices”, which continued unchecked because of the telco’s lack of compliance controls.
“This misconduct was the result of corporate arrogance, a lack of oversight, and business models that failed to prioritise the protection of vulnerable customers,” the FCA said.
“More broadly, this case is yet another example of why the telco sector needs stronger, enforceable regulation.”