Optus has been fined $100million after it was found to have pressured 400 ‘vulnerable’ customers to buy products they didn’t need and couldn’t afford.
The beleaguered telco giant was described as ‘predatory’ and ‘appalling’ in its conduct as the fine was handed down in the Federal Court on Wednesday.
The Australian Competition and Consumer Commission (ACCC) launched the legal action last year, alleging 429 Optus customers were sold phones and accessories they didn’t want, need or afford during a two-year period up to June 2023.
Many of those impacted were First Nations people from regional and remote areas and customers living with mental disabilities or in disadvantage.
In his decision, Justice O’Sullivan said the consequences of Optus’s conduct were ‘profound’ and caused numerous individuals ‘severe financial harm, emotional distress, and social shame’.
‘Particularly damaging was the heightened risk of losing access to essential telecommunications services when faced with inflated service costs.’
He said that the ‘inappropriate sales practices’ occurred across 16 stores in SA, Queensland, the Northern Territory, Victoria, WA and Tasmania.
Examples of the misconduct included putting undue pressure on consumers to purchase a large number of products.
Optus has been fined $100million after it was found to have pressured 400 ‘vulnerable’ customers to buy products they couldn’t afford (pictured, an Optus store in Sydney)
The beleaguered telco giant was described as ‘predatory’ and ‘appalling’ in its conduct as the fine was handed down in the Federal Court on Wednesday
The court also heard staff failed to explain relevant terms and conditions to vulnerable consumers in a manner they could understand and did not have regard to whether consumers had Optus coverage where they lived.
There were instances where products and services were sold which Optus knew, or ought reasonably to have known, the consumers could not afford, as well as cases where consumers were misled to believe that goods were free or included as part of a bundle at no additional cost, the court heard.
‘Optus senior management knew or ought to have known of the system failures that allowed the unconscionable conduct, which may rightly be described as predatory, to occur, yet failed to act with any sense of urgency,’ Justice O’Sullivan said.
‘In failing to act notwithstanding knowledge, senior management abrogated their management responsibilities and consequently Optus abrogated any semblance of responsible corporate behaviour.’
Financial Counselling Australia director of First Nations policy, Lynda Edwards, said the fine was ‘not a lot of money’ to big companies like Optus.
‘What is it going to take for these companies to actually look after vulnerable people in our communities? You know, our telcos in Australia, they’re given free reign on how they self regulate their business,’ she told ABC News.
Optus was ordered to publish a corrective notice and pay the ACCC’s court costs on top of the $100million fine.
The company also entered into an ‘Enforceable Undertaking’ to improve sales practices and supports customers, particularly those who are vulnerable.
Chief executive Stephen Rue (pictured), who was appointed as Optus boss in mid-2024, informed Australians during a press conference on Friday about the 13-hour outage
An apology message to customers during a previous outage in 2023 is pictured
It’s understood Optus has introduced a new Chief Legal Officer and a new Chief Security and Risk officer to lead the departments.
ACCC Deputy Chair Catriona Lowe welcomed the substantial fine for what she described as ‘truly appalling’ conduct.
‘During the course of our investigation we heard from many people who had not only experienced significant financial harm, but also emotional distress and fear after being pursued by debt collectors for long periods,’ she said.
‘A company of Optus’s size should have had better systems and controls in place to identify and stop this sort of behaviour.’
In a statement following the ruling, Optus said it is remediating impacted customers as a ‘matter of priority’, whether they were part of ACCC’s claim or separate to it.
The telco giant will also pay $1million to support digital literacy initiatives for First Nations Australians.
The ruling has also come as the beleaguered telco faces further scrutiny following a 13-hour triple-0 blackout on Thursday that has been linked to up to four deaths.
It’s understood that a botched firewall update blocked hundreds of calls to emergency services in South Australia, Western Australia, the NT and NSW.
Dr Kerry Schott (pictured) will lead an independent inquiry into a 13-hour triple-0 Optus blackout on Thursday which has been linked to up to four deaths
The telco giant said it was unaware of the catastrophic systemic failure until hours later, which wasn’t publicly addressed until late the next day.
On Wednesday, Optus announced an independent inquiry into the outage which Kerry Schott will lead, as calls louden for CEO Stephen Rue – who was appointed in mid-2024 – to step down.
Dr Schott’s review will probe the causes of the outage and examine the operational management of triple-0 calls on the Optus network.
It will also look at the telco’s response to the incident and whether it adhered to policies and legal requirements.
Optus has faced a barrage of criticism following Thursday’s incident because it had not implemented a third of the recommendations after a non-fatal outage in 2023.
Former chief executive Kelly Bayer Rosmarin resigned 12 days later after a hacking incident left millions of customers exposed to online fraud.
