Telstra resolves sales practices investigation for 108 vulnerable Indigenous customers
Thursday 26 November 2020: Telstra today reached a settlement with the ACCC, including a proposed penalty of $50 million, in relation to unconscionable conduct involving five Telstra licensed stores that were engaged in inappropriate sales practices with 108 Indigenous consumers between 1 January 2016 and 27 August 2018.
During this time a small number of partner stores in NT, SA and WA, operating under a Telstra licence, sold mobile devices and plans to 108 Indigenous customers who could not afford them, and which were not always appropriate for their needs. Telstra’s processes then allowed the debts owed by some customers to be sold to third-party collection agencies.
Telstra CEO Andrew Penn apologised again for the failings and the impact they have had.
“I have spoken often about doing business responsibly including about these failings since earlier this year. I am determined we have a leadership position and hold ourselves accountable in this regard,” Mr Penn said.
“While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not ok.
“We have taken steps to provide full refunds with interest, waived debts and allowed most customers to keep their devices to help make things right.”
Mr Penn said Telstra’s remediation program for the 108 customers was in addition to the proposed $50 million penalty which was provisioned for in our Full Year Results in August 2020.
“This included appointing a customer advocate to help us better identify and respond to such issues, working more closely with community representatives and financial counsellors, and shortly introducing a specific call centre in the Northern Territory which will also assist our indigenous customers,” Mr Penn said.
“Our team in the Northern Territory is also spending more time in these local communities directly helping customers understand their plans as well manage billing and service issues.
“Early this year I visited the NT, SA and WA to meet with some of the affected communities and customers to apologise and hear first-hand of the impact of these sales practices on them. I also wanted to understand how our program to address the problems was progressing and being received.
“We have always taken this matter seriously, however initially we thought these were isolated issues. When we looked more deeply it was clear there were additional instances where our processes had not been followed and our understanding of customers could have been better.
“Being a responsible business and doing what is right for customers and the community is a non-negotiable for Telstra, but we do not always get it right.
“We need to acknowledge when that happens, and today is unfortunately one of those times. Disappointingly these customers did not receive the standard of care or service they should expect from us, and we did not then act quickly enough to fix the issues once they became known.”
Mr Penn said Telstra was committed to improving the experience for all customers.
“This is at the heart of the company’s T22 strategy which we launched in 2018 to fundamentally transform telecommunications products and services and remove pain points that have frustrated Australian customers for too long,” Mr Penn said.
“This has already included redesigning and reducing our plans from 1800 to 20, abolishing lock-in service contracts, getting rid of excess data charges, having better processes to cater for those facing affordability concerns including tighter credit checks as well as new rules on selling to customers who may be vulnerable.”
The ACCC agreed that Telstra’s Board and senior executives were not aware of, involved in, nor authorised these sales practices.
Mr Penn said although this was a small number compared to the millions of sales that Telstra makes each year, he took full accountability for what had happened, with the company focused on ensuring the failure did not happen again.
“We have been working hard to ensure that our actions, processes and practices reflect our purpose and our values, so that we minimise the potential for such sales practices re-occurring and having such a significant impact on a vulnerable part of our community.
“We all strive to do the best we can for our customers and we get that right the vast majority of the time. I do not want this issue to reflect poorly on the thousands of people working to do the right thing every day,” he said.
The settlement is now to be considered by the Federal Court for approval.
Reference number: 129/2020