Tech

Telstra ‘misled customers by charging for unwanted products’

Mar 26, 2018

Telstra has apologised for 'misleading customers'.

Telstra has been forced to apologise after being hauled into court over claims it lumped thousands of customers with false billing charges – with some even charged for games and ringtones they knew nothing about.

The Australian Competition and Consumer Commission (ACCC) took the company to court on Monday, amid claims it made false representations to consumers over its third-party billing service, known as Premium Direct Billing.

The service essentially allowed customers to add paid content such as apps and games to their phone bill instead of paying for them straight away. Despite it working for many, it also led to thousands of customers being charged for ringtones and games they didn’t even know about, between 2015 to 2016.

It resulted in up to 100,000 customers finding items on their phone bills they never ordered, or had no knowledge about. The telecommunications giant has now admitted to misleading them, and said it should have done more to rectify the problem following a stream of complaints.

“Telstra has admitted that it misled customers by charging them for digital content, such as games and ringtones, which they unknowingly purchased. Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from,” ACCC Chairman Rod Sims said in a statement.

“Telstra knew that the Premium Direct Billing service it operated led to large numbers of its customers being billed for purchases made without their knowledge or consent. Despite this, Telstra continued to bill customers, making substantial revenue from the service at the expense of customers.”

Indeed, Telstra has since admitted it was aware of complaints, and has already refunded an estimated $5 million to affected customers.

Sims said he hopes this case will stop other companies relying on third party billing services, and added: “When customers contacted Telstra to complain many were directed to third parties, even though Telstra knew that they had difficulty getting a refund from third party suppliers, or cancelling their subscription. Customers were often left frustrated and out of pocket as a result of Telstra’s conduct.”

Telstra officially ended its Premium Direct Billing service on March 3, and the company’s group executive of consumer, Vicki Brady, apologised to customers who were signed up to products they “could not opt out of”.

She said in a statement: “A large proportion of customers who decided to subscribe to a service were happy with it, however the number of complaints received over time shows there were issues with the PDB service that needed to be addressed.

“PDB services have been recognised as an issue for the broader telecommunications industry – Telstra took a number of steps to improve our processes but acknowledge we could have done more and done it faster.”

According to the ACCC, the penalty for Telstra could total as much as $10 million, with final orders yet to be decided by the Federal Court.