Optus cops historic $10 million fine for misleading customers

Written on the 7 February 2019 by Business News Australia

Optus cops historic $10 million fine for misleading customers

In October 2018 Optus was staring down the barrel of a $10 million fine for misleading customers in relation to its third-party billing service.

The Federal Court has decided to hit Optus with that $10 million penalty for its treatment of customers who unknowingly purchased games, ringtones, and other digital content via its Direct Carrier Billing ('DCB') service.

The telco admitted to the federal court that it did mislead customers when it billed customers for digital content which they mistakenly or accidentally bought via the DCB service.

The $10 million penalty is one of the largest ever handed out by the Federal Court for this kind of corporate behaviour which affected more than 240,000 Optus customers.

During proceedings, Optus admitted that it did not make clear to customers that the DCB setting was turned on by default, and that they would be billed directly by Optus for any content bought through the service.

To make matters worse, the telco even admitted that it knew that customers were mistakenly purchasing content via the DCB service.

The Australian Competition and Consumer Commission chair Rod Sims says that Optus received over 600,000 enquiries about the service and that the telco did not put in place appropriate safeguards to prevent mistaken purchases from occurring.

"In many cases, Optus customers had no idea the were buying anything, and certainly did not need or want the content for which they were being charged," says Sims.

"Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints."

The ACCC says that Optus has refunded around 240,000 customers around $8 million whilst third-party providers have refunded around $13 million.

According to the watchdog's investigation, Optus earned around $65.8 million in commissions for products sold through the DCB service, with customers charged $195 million for the content.

Back in May, the telco was slapped with a $1.5 million fine by the Federal Court for making misleading statements to its customers regarding their transition to the NBN.

The telco was ordered to pay up after it told 14,000 customers, between the dates of October 15 and March 17, that their services would be disconnected if they didn't move to the NBN.

The court found that Optus couldn't legally force disconnection within the timeframe that it claimed, under the terms of its own contract.

The ACCC's action against Optus follows similar proceedings against Telstra over its Premium Direct Billing (PDB) service, where it was ordered to pay $10 million in penalties.

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