Optus fined $66M over ‘disgraceful’ exploitation of customers

Australian telecoms giant Optus has been fined AU$100 million (US$66 million) by the Federal Court of Australia for systematic exploitation of vulnerable customers.

The Australian Competition and Consumer Commission (ACCC) brought the case against the country’s second-largest telco, revealing a pattern of predatory sales practices between January 2019 and September 2023.

In his judgment, Justice O’Sullivan described the company’s behaviour as “appalling” and “extremely serious,” noting it was a “manifest betrayal of trust”. The court found that Optus sales staff – driven by commission-based incentives – targeted individuals experiencing disadvantages, including many people from remote communities, the elderly, and those with cognitive and intellectual disabilities.

The misconduct was widespread, occurring at 16 stores across the country. Sales staff employed a range of deceptive tactics, including subjecting customers to undue pressure, selling them multiple devices and plans they did not need and could not afford, and failing to explain contractual terms. In some instances, staff sold services to people living in areas with no Optus network coverage, rendering the products useless.

One harrowing example detailed in court documents involved a man who was deaf, mute, and had partially amputated fingers. He was signed up for four contracts totalling over AU$7,500, with monthly repayments he could not possibly meet. When his support worker tried to intervene, Optus staff initially refused to engage, insisting they speak directly with the customer despite being told of his disabilities.

In another case, a woman with cerebral palsy and ADHD – who survived on a disability pension – was trapped in 24 separate contracts. Staff manipulated credit checks to push through sales, saddling her with immense debt and at one point overdrawing her pension account by nearly AU$3,000. Her carers repeatedly warned Optus of her inability to understand or afford the services, but their pleas were ignored and her debts were referred to collectors.

The court found that Optus’ systems were riddled with deficiencies that enabled the misconduct. Staff were able to manipulate or bypass credit controls to approve sales far beyond what a customer could afford. This was particularly evident in the company’s Darwin stores, where an internal investigation found the inappropriate selling conduct was “pervasive” and led to exploitation of at least 363 customer accounts. Managers at these stores were found to have actively taught junior staff how to engage in misconduct.

Perhaps most damning in the investigation that led to today’s fine was the finding that Optus senior management knew of these failures for years yet failed to act. Justice O’Sullivan described their inaction as a “complete abrogation of managerial responsibility.”

As early as December 2019, management was aware that staff at its Mount Isa store were creating fraudulent contracts without customers’ knowledge, the majority of whom were First Nations Australians. Despite this knowledge, Optus pursued aggressive debt collection against at least 39 of these individuals, referring their non-existent debts to third-party agencies and causing immense distress.

The court also condemned Optus for its misleading response to the Telecommunications Industry Ombudsman (TIO). In September 2023, after the TIO raised concerns about misconduct in Darwin, Optus falsely claimed it had not found evidence of targeting vulnerable or First Nations customers. Justice O’Sullivan labelled this failure to disclose the full extent of its internal findings a “disgrace.”

The AU$100 million penalty reflects the severity and systemic nature of the contraventions. In addition to the fine, Optus must pay the ACCC’s legal costs of $1.5 million and publish corrective notices online, in newspapers, and in its retail stores.

Optus has also provided the ACCC with a legally binding five-year undertaking to overhaul its practices. The company will appoint a senior compliance officer reporting directly to the CEO, redesign its sales commission structures to prioritise customer service over sales volume, and improve training on how to identify and assist vulnerable customers. The undertaking includes buying back 34 licensee stores, particularly those where the misconduct occurred, to bring them under direct company management. Optus will also donate AU$1 million to an organisation focused on improving digital literacy for First Nations Australians.

While Optus has apologised and taken steps to remediate affected customers, this judgment and resulting fine aims to be a reminder to the telecoms industry about its fundamental obligations to protect vulnerable people and prevent their exploitation.

See also: Fatalities spark scrutiny of Optus outage in Australia

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Tags: australia, court, law, optus, sales