Telstra is set to refund thousands of mobile phone customers, after the ACCC found individuals unintentionally incurred third-party charges and subscriptions, without being prompted to verify their identity, or enter payment details.
The ACCC has penalised Telstra for making misleading representations about its third-party billing service ‘Premium Direct Billing’ (PDB), and the telco has committed to refund affected customers.
Telstra admits “more than 100,000 customers may have been affected, and charged”.
By October 2017, Telstra achieved about $61.7 million in net revenue from commissions of its premium billing services, which charged over 2.7 million mobile numbers.
The ACCC claims Telstra was aware of customer confusion concerning its PDB service, following a “large number of calls” disputing charges.
Telstra’s ‘Premium Direct Billing’ (PDB) services enable customers to purchase content from third-party developers, outside usual marketplaces such as Google Play.
The ACCC found Telstra did not adequately inform customers PDB was set as default on their mobile accounts – unintentionally accessed content through Telstra’s PDB service, would be billed directly by Telstra.
Telstra admits its internal processes for dealing with the issue were “inadequate”, and has refunded at least $5 million. The company pledges to rectify any further complaints “in good faith”.
As part of the resolution, Telstra has ceased operations of its ‘Premium Direct Billing’ service.
ACCC Chairman, Rod Sims, affirms Telstra continued to make “substantial” revenue “at the expense of consumers”:
“Telstra has admitted that it misled customers by charging them for digital content, such as games and ringtones, which they unknowingly purchased. Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from”
“Telstra knew that the Premium Direct Billing service it operated led to large numbers of its customers being billed for purchases made without their knowledge or consent. Despite this, Telstra continued to bill customers, making substantial revenue from the service at the expense of customers”
“When customers contacted Telstra to complain many were directed to third parties, even though Telstra knew that they had difficulty getting a refund from third party suppliers, or cancelling their subscription. Customers were often left frustrated and out of pocket as a result of Telstra’s conduct”.
The telco has agreed to consent to orders in the Australian Federal Court, including declarations it breached the ASIC Act.
Telstra has also agreed to make joint submissions about the imposition of pecuniary penalisation totalling $10 million.
The Australian Federal Court will decide at a later date whether orders sought – including proposed penalties – are “appropriate”.
The ACCC is aware other telcos are offering similar third-party billing, and endeavours to take similar action if required:
“The ACCC is aware that other carriers offer similar third party billing services to their customers. We are monitoring complaint levels and will take enforcement action in relation to these carriers if we believe they are breaching the law,” states Mr Sims.
Telstra customers are invited to check their mobile account, and check for unauthorised charges under their PDB service. Consumers are advised to contact Telstra, and seek a refund.
As part of the ACCC’s ruling, the telco has agreed to contact and refund affected customers (who haven’t yet received a refund), specifically those who have already complained to the Telecommunications Industry Ombudsman (TIO) or Telstra directly.
