Home Telecoms & NBN ACCC starts court action against Optus over misleading consumer allegations
ACCC starts court action against Optus over misleading consumer allegations Image courtesy of JanPietruszka at FreeDigitalPhotos.net Featured

The competition watchdog, the ACCC, has commenced court action against Australia’s second largest telco, Optus, alleging the company made false or misleading representations to consumers in relation to its third-party billing service known as "Direct Carrier Billing"..

The court action by the Australian Competition and Consumer Commission follows Optus' admission that it made false or misleading representations in contravention of the ASIC Act, and has agreed to apply jointly with the ACCC for orders from the Federal Court.

Optus has operated the DCB service since May 2012, with about two million customers charged each financial year. Optus agreed to cease offering the DCB service on 24 August as part of resolving the ACCC’s investigation.

The proposed orders include declarations that Optus breached the ASIC Act, and for Optus to pay $10 million in penalties. The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.

Optus has also committed to offer refunds to customers affected by its conduct, with more than 240,000 Optus customers possibly affected.

The company has admitted that it was aware, from at least April 2014, its DCB service led a significant number of customers to be charged for premium content such as ringtones, games, horoscopes, etc. that they did not want and had not agreed to buy.

Optus also admitted that it failed to adequately inform customers the DCB service was a default account setting and that if customers received premium content via their phone, even unintentionally, they would be billed for it.

“A substantial number of Optus customers were signed up to subscriptions for expensive, often unwanted content without being required to enter payment details or verify their identity, as occurs with many other online purchases,” ACCC chair Rod Sims said.

“Many customers didn’t realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder’s knowledge.”

“Despite over 600,000 direct inquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections.

“There was compelling need for safeguards to be put in place to stop customers paying for content like ringtones and games that they did not want, did not use, and had difficulty unsubscribing from, and Optus just ignored this.”

The court action announced on Wednesday follows a similar one against Telstra over its Premium Direct Billing service, where it was ordered to pay $10 million in penalties.

“The ACCC is continuing its investigation into third-party billing services by other carriers, and further enforcement action may well follow,” Sims said.

According to the ACCC, a total of $31 million has been refunded to about 240,000 Optus customers to date, with Optus paying around $12 million directly and third-party providers refunding another $19 million.

The ACCC has encouraged Optus customers to check their mobile accounts and, if they believe unauthorised charges have been applied under the DCB service, they should contact Optus to seek a refund.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

 

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