The Federal Court handed Telstra a $10-million penalty for making false or misleading claims to its customers, in relation to its “Premium Direct Billing” service.
Telstra admitted to charging customers for a range of digital content, including ringtones and games, that they had purchased unknowingly. It said that in excess of 100,000 customers could be owed refunds.
The error arose because Telstra failed to properly inform customers that the Premium Direct Billing service had been set as the default on their accounts, and customers accessing content through the service – even unintentionally – were then billed.
“Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity. By introducing and operating the Premium Direct Billing service, Telstra generated substantial profits by exposing customers to unauthorised charges,” the ACCC’s Rod Sims said.
“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone. The $10 million penalty imposed by the Court recognises the seriousness of Telstra’s conduct.”
Refunds so far amount to at least $5 million, according to Telstra.
A Telstra spokesperson said that PDB services – which allow customers to purchase online content including apps, games and videos either by subscription or as one-offs – have been problematic not just for itself and its customers.
“PDB services have been recognised as an issue for the broader telecommunications industry and, while we took a number of steps to improve our processes, we acknowledge we could have done more and done it faster,” the spokesperson said.
“We stopped providing new subscription-based services like these in December, and completely exited the service from 3 March this year.”
The spokesperson confirmed that it has been contacting affected customers “to apologise and to offer refunds”, and this process will continue.
“Customer experience is the number one priority and we know we don’t always get it right, so we will continue to take steps to rectify these PDB charges where they need to be addressed,” said the spokesperson.