Sydney, June 18: Optus Mobile Pty Ltd has admitted to engaging in unconscionable conduct in its sale of mobile phones and telecommunications products to hundreds of vulnerable consumers, many of whom were First Nations Australians, following court action brought by the Australian Competition and Consumer Commission (ACCC).
As part of a joint agreement with the ACCC, Optus will ask the Federal Court to impose a $100 million penalty for breaches of the Australian Consumer Law. The court will determine whether the proposed penalty is appropriate and decide on final orders.
The unlawful sales practices took place at 16 Optus stores between August 2019 and July 2023.
According to the ACCC, Optus staff pressured consumers into signing contracts for phones and accessories they didn’t want, need, or could not afford.
Many customers were unaware of ongoing payment obligations and, in some cases, were misled into believing the goods were free.
The conduct disproportionately affected consumers living with mental or cognitive disabilities, low financial literacy, or limited English proficiency.
A significant number were First Nations people from regional and remote parts of Australia, including Mount Isa and the Northern Territory.
The ACCC found that Optus sales staff in some cases added false information to accounts, including fake ABNs, manipulated credit checks, and ignored clear signs that the consumers were unable to understand or afford the contracts.
Despite internal investigations identifying fraudulent behaviour as early as 2019, Optus failed to promptly fix its systems and, in some cases, referred related debts to third-party collectors.
“Many of these consumers who were vulnerable or experiencing disadvantage also experienced significant financial harm. They accrued thousands of dollars of unexpected debt and some were pursued by debt collectors, in some instances for years,” said ACCC Deputy Chair Catriona Lowe.
The regulator highlighted one case where a First Nations consumer living in a remote community with no Optus coverage was convinced to enter a store under pressure and later signed up for more than $4,000 worth of products and services.
In another case, a consumer with an intellectual disability entered a store with a support worker to buy a $20 recharge but walked away with over $8,000 in contracts and false information listed under their account.
The misconduct took place in Optus-owned and licensee stores, with the Mount Isa location identified as particularly problematic.
Internal Optus reports found that the store manager had falsified documents and used identities of unsuspecting First Nations individuals to open fraudulent accounts.
Some of these consumers were later contacted by debt collectors and even threatened with legal action.
While Optus had launched internal probes, it continued to allow debt collection efforts on accounts linked to inappropriate or unauthorised contracts as late as mid-2024.
The ACCC also found that Optus’s commission-based sales model may have encouraged the behaviour. Despite industry codes warning against such incentives—especially in dealing with vulnerable communities—Optus did not make the necessary systemic changes in time.
Under the proposed agreement, Optus has committed to a number of reforms.
These include compensating impacted consumers, overhauling its complaint handling processes, changing its staff remuneration model, and buying back 34 licensee stores across the Northern Territory, Queensland, and South Australia.
Optus has also agreed to donate $1 million to support digital literacy programs for First Nations Australians.
Consumers who believe they were affected can contact Optus’s dedicated support line at 1300 082 820.
The agreement and proposed court orders are not yet final and remain subject to court approval.
Meanwhile, the ACCC has issued a public warning regarding scam calls, texts, or emails impersonating Optus or the ACCC in light of this high-profile compensation case.
Consumers are urged to remain vigilant and report any suspicious contact to Scamwatch.
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