Time to shop around? Telstra accused of over-selling to seniors

May 12, 2021
Telstra has been hit with more allegations of mis-selling to vulnerable people, according to a new Choice investigation. Source: Getty

There are fears older Australians are being taken for a ride, with Australia’s largest telecommunications provider being accused of using “aggressive” sales techniques and signing up seniors for services and products they neither need nor want. One 91-year-old woman alleges she was even signed up to an internet plan when she didn’t own a computer or mobile device.

Telstra is Australia’s largest telecommunications company, which dates back to the pre-privatisation of the industry, and for that reason, some older customers are holding onto a loyalty that makes them reluctant to shop around.

However, according to a new investigation by Choice, the company is allegedly facing allegations of mis-selling. But it’s not just customers complaining about Telstra’s tactics, with two former staff members speaking out about the company’s “aggressive” and “competitive” sales culture. Telstra has said it takes all claims of mis-selling seriously.

For 91-year-old Nola Lehninger, it was a case of being sold something she didn’t need and didn’t quite understand. Nola told Choice that she only uses her landline and bemoans seeing young people on the street with their headphones in, not watching where they’re going. However, last year she was signed up to an internet plan, which cost her an additional $15 a month despite not even owning a mobile or computer.

“They never mentioned that I would be paying more … they certainly played me up, didn’t they?” she said. “I saw my bill and didn’t know what was happening. They must have thought I was so old I didn’t know what I was talking about. Maybe they take advantage of someone who is very old like me.”

After paying the additional money for 12 months and her carer complaining multiple times, Telstra eventually agreed to lower the bill and refund the money.

For Nicola Clement, it was her parents who were allegedly being taken advantage of, leaving her widowed mum paying for devices she never wanted or needed. Nicola told Choice that her mother phoned the telco mid last year to transfer the account into her name as her husband’s health was declining.

Choice alleges that what should have been a straightforward call was seen as a sales opportunity, with Nicola’s 68-year-old mother walking away with what she thought were two free tablet devices. It was only when her daughter checked the bills, after her dad’s death later that year, that she discovered her parents had been signed up to a 36-month repayment plan for the devices, which forced them to pay $300 per device to cancel.

“I feel that they have been taken advantage of in the worst possible way,” Nicola told Choice. “Dad’s health was deteriorating badly and he was on quite strong medication. Dad was always the one who was more technologically savvy and he thought he was onto a great deal and mum went along with it.”

ACCC

According to the Choice investigation, this isn’t the first time Telstra has been accused of over-selling to vulnerable customers, with the Australian Competition and Consumer Commission (ACCC) filing proceedings against them in November last year.

The ACCC filed the proceedings in the Federal Court, aiming to fine Telstra $50 million for “unconscionable conduct” for selling mobile phone plans to more than 100 Indigenous consumers who did not understand and could not afford the plans. The investigation claimed that board and senior executives were unaware of the improper sales tactics, but the company had no effective systems in place to detect or prevent the conduct.

Choice says the fine was for sales between 2016 and 2018, which was well before the cases involving Nicola and Nola. “Telstra accepted the penalty and it is now up to the Federal Court to determine if the fine is adequate,” the Choice report states. “If approved by the court, it would be the second-highest penalty ever imposed under Australian consumer law.”

A recent report has shown a staggering number of people affected by mis-selling or over-selling from a range of telco companies. The survey was conducted by Financial Counselling Australia (FCA) and found that 80 per cent of financial counsellors reported that mis-selling or over-selling had contributed to their clients’ financial difficulties.

Fiona Guthrie, chief executive officer of FCA, said the report highlights how widespread the problem is among customers of all ages. “It says it’s a really huge problem and we shouldn’t be surprised,” she said. “The whole industry works on a commission-based sales model, and as soon as you’ve got commission-based sales you incentivise poor practices, which take advantage of people’s vulnerability”.

Guthrie called on Telstra, and the industry more broadly, to do away with the commission-based structure, in the same way the banking industry has been forced to. “This model is too fraught with danger,” she said.

Sales culture

But it’s not just customers warning of the tactics used, with two former staff members of the company also telling Choice about the “sales-focused culture”, which had “little regard for whether the products being sold are wanted or needed”.

James* worked at Telstra about five years ago and told Choice he was told off by management at the store he worked at in Melbourne for not up-selling older customers a Telstra phone insurance plan that he felt they didn’t need. “It’s all sales focused, it’s not even about matching to needs or anything, it’s all profit motive,” he said. “I know it’s a business, but it has a duty to its customers not to be doing some of these aggressive sales tactics.”

David* told Choice he had worked for Telstra for more than 15 years (until early 2021). He described the sales culture as highly competitive, with bonuses such as overseas trips for those with the highest annual sales. “It all added towards your tally. They used to have a board on the side for each team. You had your products and your add ons, and they would track your tally each week and month,” he said. “I was pretty competitive, I always wanted to be top three, so I kept track of that. There was always competition between the guys and teams.”

David said the salespeople received financial bonuses based on their performance, with the biggest commission going to those who sold higher-cost products. “At the end of the day, I guess, as a business, they didn’t care how you got the sales, as long as you got the sales,” he said.

Telstra responds

A Telstra spokesperson told Starts at 60 that the company had no tolerance for overselling or mis-selling, saying that the company’s business model is strongly focussed on the needs of the customer.

“We’ve simplified our plans, gotten rid of lock-in contracts and removed unexpected fees and charges,” the spokesperson said. “Our retail model and training for staff focuses on meeting customer needs and includes important training on responsible selling, culture training and vulnerable customer management. All our frontline team members are required to complete this training. Coaching of staff and scorecard outcomes also aligns to our responsible selling approach.

“We are proud of the work we do in conjunction with community and government partners to increase the digital skills of seniors in their local communities (our programs include Tech Savvy Seniors and Social Seniors). We have supported Pensioners for many years (since 1991) through concessional products and services.

“We take responsible selling extremely seriously and we don’t shy away from the fact that we have made some mistakes previously. Our single ownership model for all retail stores announced in February will allow Telstra to further embed our responsible business approach and have more direct engagement with employees.

“The vast majority of our customers have a positive experience when they visit our stores. That said, we know we can still improve, and we’ve made recent changes to improve our products, plans and services”.

*Names changed to protect privacy

** This content was updated at a later date to reflect Telstra’s response.

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