Telstra (ASX:TLS) slapped with $50 million fine for misleading indigenous customers

Company News

by Michael Luu

Australia’s largest telecommunications company Telstra has been slapped with a $50 million fine for misleading conduct in sales activities with aboriginal customers and untimely response to remediate these shortcomings.

Telstra has admitted that the telco giant was in violation of the Australian Consumer Law by locking 108 indigenous customers into post-paid mobile contracts without adequate effort to transparently inform them of the relevant expenses, terms and conditions.

The affected individuals were found to be incapable of comprehending the agreements and affording the costs associated with their mobile services. Many of these customers are not native English speakers.

The ACCC conducted an investigation into Telstra’s sales operations between January 2016 and August 2018, and found that the telco services provider’s sales staff deployed unconscionable and deceiving sales tactics at five branches in the Northern Territory, Western Australia, and South Australia.

The business regulator spotted evidence that many Telstra sales personnel took advantage of these indigenous consumers’ vulnerabilities and socio-economic disadvantages to misinform them about their product offerings. In many instances, the offenders even misrepresented the post-paid services as “free” and disregarded credit assessment standards to achieve their sales objectives.

Several sales staff even tampered with credit check procedures to approve post-paid service applications for ineligible customers. The offences extended as far as falsely verifying employment statuses for jobless applicants.

The ACCC commented on Telstra’s initial response to the claims, “Telstra’s board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them.”

As a result, Telstra accepted responsibility for the breaches and assisted the ACCC’s investigation, as the two parties coordinated joint statements to the Federal Court. The $41.4 billion enterprise has begun a remediation project to compensate affected customers and amended its legal compliance capacity through an undertaking with the ACCC recognised by the Federal Court.

Shares in Telstra (ASX:TLS) are trading flat at $3.48 

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