In a stunning revelation, Australian telecommunications giant Optus finds itself in the crosshairs of the nation’s consumer watchdog. The Australian Competition and Consumer Commission (ACCC) has launched a federal court case, alleging that the telco behemoth engaged in unconscionable conduct by selling phones and plans to hundreds of vulnerable customers who could not afford them.
ACCC Alleges Systematic Exploitation
The ACCC’s case paints a disturbing picture of systematic exploitation. According to the allegations, Optus targeted 429 customers, many of whom were experiencing vulnerability or disadvantage. This included individuals living with mental disabilities, diminished cognitive capacity, learning difficulties, financial dependence, unemployment, and limited financial and legal literacy.
The majority of the affected customers, 363 in total, were served at Optus’s Darwin stores. An additional 42 consumers hailed from the Optus Mount Isa store, while 24 individual customers were scattered across various store locations throughout Australia.
Upselling Incentivized by Commissions
At the heart of the allegations lies a troubling incentive structure. The ACCC contends that Optus staff were encouraged to upsell goods and services to these vulnerable customers through a commission-based remuneration system. This led to customers being sold products they did not want, need, or could not afford.
“We allege Optus’s conduct disproportionately impacted consumers experiencing vulnerability and/or disadvantage, and that these practices were incentivized by the commission-based remuneration for sales staff,” stated ACCC Chair Gina Cass-Gottlieb.
Pursuing Debts, Protecting Profits
Adding insult to injury, the ACCC alleges that Optus took steps to protect its own financial interests by clawing back commissions from sales staff in some cases. However, the telco giant allegedly failed to remediate the affected consumers, instead pursuing them for debt related to these sales.
Debt collectors were allegedly dispatched to chase payments from many of these consumers, despite the questionable nature of the sales. In some instances, Optus purportedly sold expensive phones and accessories to customers without even checking if they had mobile network coverage where they lived.
Intellectual Disability No Barrier to Exploitation
One particularly egregious case highlighted by the ACCC involves an individual living with an intellectual disability. Despite the disability being evident to Optus staff, the person was allegedly sold an expensive phone, a business phone contract under a false ABN, a new NBN internet plan, and accessories.
“The person did not want or need the majority of these items, and was upset and embarrassed about the unwanted and expensive items they were sold,” the ACCC stated.
When a representative of the individual attempted to return the items, Optus staff allegedly refused to cancel the contracts. It was only through the intervention of a financial counselor that the contracts were eventually canceled.
First Nations Customers Targeted
The ACCC also alleges that two licensee-operated stores in Darwin engaged in inappropriate sales conduct over a two-year period, ending in June 2023. This included selling products to 363 customers, many of whom were First Nations customers from remote parts of the Northern Territory where there was no mobile coverage, without performing the necessary coverage checks.
Fraudulent Contracts and Credit Manipulation
In Mount Isa, the ACCC claims that Optus acted unconscionably by pursuing debts for at least 42 consumers, despite some senior executives being aware that the debts were related to contracts fraudulently created by a staff member at the licensee-operated store.
Other allegations include sales staff manipulating credit check results to sell goods and services to customers who could not afford them, without the customers’ knowledge. Staff also allegedly failed to explain the terms and conditions of contracts in an understandable manner.
Optus Responds, Government Reacts
Optus’s interim CEO, Michael Venter, issued an apology to affected customers “for the distress caused”. He stated that the company is refunding customers, waiving outstanding debts, and allowing customers to keep the devices. Venter also noted that disciplinary action, including terminations, had been taken against staff determined to be responsible for the alleged misconduct.
The telco claims to have invested over $5 million in a dedicated specialist care team and developed a new vulnerable customer policy in response to the allegations.
Communications Minister Michelle Rowland described the allegations as “very serious”, stating, “Telcos must act in the best interest of their customers, particularly those experiencing vulnerability or disadvantage.”
ACCC Seeks Penalties and Redress
The ACCC is seeking declarations and orders for penalties, non-party consumer redress, publication orders, a compliance program, and costs from the federal court. If proven, the allegations represent a serious breach of consumer protection laws and a disturbing exploitation of vulnerable Australians.
As the case unfolds, it serves as a stark reminder of the importance of robust consumer safeguards and the need for corporations to prioritize ethics over profits. The outcome of this case could have far-reaching implications for the telecommunications industry and the way it interacts with vulnerable customers.
For now, the nation watches and waits as Optus faces the consequences of its alleged misconduct in the federal court. The ACCC’s case, if successful, could set a powerful precedent in protecting the rights of vulnerable consumers and holding corporations accountable for unconscionable behavior.
