finance

Telstra fined $50 million over unconscionable treatment of Indigenous phone plan customers

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The Federal Court has ordered Telstra to pay a penalty of $50 million, plus costs, for its treatment of Indigenous customers in rural and remote parts of Australia.

The decision comes after the telco admitted it had acted unconscionably towards 108 customers who were customers at five Telstra-branded stores, by selling phone plans people could not afford and did not understand.

In many cases, multiple phone plans were sold to a single customer on the same day, and they then ran up thousands of dollars in data charges.

Many of the customers were pursued by debt collectors.

Telstra admitted to egregious conduct during an investigation by the Australian Competition and Consumer Commission (ACCC).

The ABC exposed the issue in 2019.

The $50 million fine is the second-largest penalty ever imposed on a company for breaking Australian consumer law, after the $125 million Volkswagen "dieselgate" fine in 2019.

Peter Gartlan from Financial Counselling Australia, which submitted nearly 100 cases to the ACCC, said the decision was welcomed.

"It sends a clear message to the telco industry that mis-selling practices will not be tolerated," he said.

"This conduct should have never happened in the first place."

The ACCC's investigation was launched in 2019 following reports that vulnerable Indigenous Australians were getting hit with "skyrocketing" phone bills.

The consumer watchdog found Telstra's sales practices caused the affected customers "severe personal financial hardship and great distress", with an average debt of $7,400 per person.

Telstra admitted to breaching consumer law and unconscionable conduct last November.

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