Telstra to pay $36m for mis-selling to Indigenous customers

Telstra to pay $36m for mis-selling to Indigenous customers

26 November 2020 | Natalie Bannerman

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Australian telco Telstra has reached a settlement with Australian Competition and Consumer Commission (ACCC) to pay A$50 million ($36.8 million) for mis-selling its services to indigenous customers.

According to the company, a small number of Telstra partner stores in Northern Territory, South Australia and Western Australia, 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 process also enabled the debts of by some of these customers to then be sold to third party collection agencies.

In response to these mistakes, Telstra CEO Andrew Penn (pictured), apologised saying:

“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,” he 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.”

In addition to the $36.8 million fine, that was accounted for in the company’s FY2020 results, Telstra has also put on place a remediation program for the 108 customers.

“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,” explained Penn.

The ACCC has confirmed that Telstra’s board and senior executives were not aware of or involved in the aforementioned sales practices and the settlement has gone to the Federal Court for approval.

“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,” added Penn.

“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.”