Optus slapped with huge $6.4M fine after misleading customers over NBN

Dec 02, 2019
Over the past decade, Optus has faced a number of fines including a penalty of $10 million earlier this year. Source: Getty.

In May 2018, Optus mass-emailed its mobile customers with the warning that their home broadband services would be disconnected very soon and encouraged them to make the switch to Optus NBN Broadband before it was too late. Now just over 18 months later, the telco is facing a whopping $6.4 million fine for the misleading claims.

The email was sent to 138,988 customers – all of whom managed their broadband services through a number of Optus’ competitors. Following proceedings brought by the Australian Competition and Consumer Commission (ACCC), the Federal Court recognised the claim as deceptive and misleading due to the fact that customers weren’t in fact facing immediate disconnection of their existing broadband services, but actually had 18 months to move their landline phone and internet services to the new NBN network.

ACCC Chair Rod Sims said that, as the NBN rollout nears its end date, consumers are beginning to make the decision of whether or not they should move onto NBN and which services would best suit their individual circumstances.

“The industry should be helping consumers during this process, not providing them with misleading information,” Sims said. “We are continuing to watch this area closely. We took this case against Optus because we were concerned its emails created a false sense of urgency for consumers and may have discouraged them from shopping around for the best deal available.”

The ACCC launched proceedings against Optus in June 2019 however, this is not been the first time the telco has faced large penalties for misleading statements. In May 2018, the Federal Court fined Optus $1.5 million for misinforming around 14,000 customers that they needed to make the transition from the HFC network to NBN in the shortened timeframe of 30 days in some cases.

Optus profited $750,000 as a result of the conduct that occurred between October 2015 to March 2017 which not only breached the rules of its contract that stated the company could not force disconnection in the given timeframe, but also misled customers by planting the idea that they had to sign up to Optus’ NBN when in fact they could choose any internet service provider.

Following the most recent complaints, the ACCC have voiced their concerns about the company and their hopes that the huge fine – which comes in at more than six times the amount they were charged last year – will encourage a positive change.

“We are concerned about Optus’ recent track record in misleading consumers about the NBN. We expect that this $6.4 million penalty will serve as a warning to Optus and other telcos that they must not mislead consumers about their choices when the NBN is being rolled out,” Sims said.

Optus is the second largest telecommunications operator in Australia behind Telstra with more than 1.1 million broadband customers. In the last 10 years, the ACCC has taken out proceedings against Optus on five separate occasions. The largest penalty came in February this year when the company was slapped with a $10 million fine for its treatment of customers who unknowingly purchased content through its third-party billing service.

According to the ACCC, Optus earned about $65.8 million in commissions for the products sold and, overall, customers were charged around $195 million. Sims said customers had no idea they were buying anything adding: “Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints.”

The fine is one of the highest imposed by the Federal Court and matches that of the $10 million fine Telstra was faced with in April 2018 for signing up mobile customers to be directly charged for content without their knowledge or approval.

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