Optus has been ordered to pay a $100 million fine for selling products to hundreds of vulnerable customers, including some with a mental disability, in the second major hit to the under-fire telco in a matter of days.
The Australian Competition and Consumer Commission (ACCC) took Optus to court for its “unconscionable conduct and inappropriate” practices when selling phones and contracts to more than 400 customers at 16 stores across Australia between August 2019 and July 2023.
The products were sold to customers, many of whom were vulnerable or came from disadvantaged backgrounds, despite them being items they did not want or need, could not use or could not afford.
Optus has been ordered to pay a $100 million fine for selling phone plans to hundreds of vulnerable customers (Eddie Jim)
According to the consumer watchdog, some of those customers owed thousands of dollars and were pursued for the payments.
Many of the customers included people living with a mental disability, diminished cognitive capacity, learning difficulties, financially dependent or unemployed, had limited financial literacy, or did not have English as a first language.
The behaviour affected many First Nations customers from regional, remote and very remote parts of the country.
Optus admitted to engaging in unconscionable conduct in June and came to an agreement with the ACCC to pay a $100 million fine.
The Federal Court has this afternoon approved the penalty, with Justice Patrick O’Sullivan noting the consequences of the telco’s conduct were “profound”.
“Numerous individuals experienced severe financial harm, emotional distress, and social shame,” he said while enforcing the fine.
“Particularly damaging was the heightened risk of losing access to essential telecommunications services when faced with inflated service costs.”
Optus admitted to engaging in unconscionable conduct in June. (Cole Bennetts)
The telco will pay the $100 million fine, remediate any impacted customers and pay an additional $1 million to support digital literacy initiatives for First Nations people.
Optus will also implement changes to improve its remuneration and incentives to prevent similar conduct and process and system changes, which will be overseen by the ACCC and an independent auditor.
“Optus is committed to working closely with the ACCC and an independent auditor to ensure the enforceable undertaking is implemented fully and transparently within the agreed timings,” an Optus spokesperson said.
Optus has also begun buying back some of its licensee stores in the Northern Territory, Queensland and South Australia and ensure a certain number of stores in those states are directly operated by Optus.
In addition, the telco will pay a portion of the ACCC’s legal fees.
Optus chief executive Stephen Rue said the behaviour was “totally and utterly unacceptable” and had prompted a whole-of-business review.
“We looked at our sales processes. We were looking at incentive schemes. We have bought back some of the franchise stores that were involved,” he said at a press conference today.
Optus CEO Stephen Rue updates the media. (Sitthixay Ditthavong)
ACCC Deputy Chair Catriona Lowe said Optus’ conduct was “truly appalling”.
“During the course of our investigation, we heard from many people who had not only experienced significant financial harm, but also emotional distress and fear after being pursued by debt collectors for long periods,” she said.
“A company of Optus’s size should have had better systems and controls in place to identify and stop this sort of behaviour.”
Optus is currently under fire after a human error and a failure to follow step one of an upgrade procedure caused a triple-zero outage on Thursday, which has been linked to four deaths.
That incident is not related to today’s ruling.
