The ACCC has commenced proceedings in the Federal Court alleging that Optus Mobile Pty Ltd (Optus) engaged in unconscionable conduct in contravention of the Australian Consumer Law when selling telecommunications goods and services to hundreds of consumers, that they often did not want or need, and in some cases then pursuing consumers for debts resulting from these sales.
Many of these consumers were experiencing vulnerability and/or disadvantage, such as living with a mental disability, diminished cognitive capacity or learning difficulties, being financially dependent or unemployed, or having limited financial and legal literacy.
Many of the impacted consumers were First Nations Australians from regional and remote areas or people from culturally and linguistically diverse backgrounds.
“We allege Optus’ conduct disproportionately impacted consumers experiencing vulnerability and/or disadvantage, and that these practices were incentivised by the commission-based remuneration for sales staff. In some cases, we allege Optus took steps to protect its own financial interests by clawing back commissions to sales staff but failed to remediate affected consumers,” ACCC Chair Gina Cass-Gottlieb said.
“This case concerns allegations of very serious conduct, as our case is that Optus sold goods to consumers experiencing vulnerability which they did not need, did not want and could not afford.”
“We also allege that Optus’ unconscionable conduct continued after management became aware of deficiencies in its systems that were being exploited by sales staff, and despite this, failed to implement fixes,” Ms Cass Gottlieb said.
Alleged conduct
The ACCC’s case against Optus involves allegations that Optus acted unconscionably in its dealings with about 429 consumers by engaging in inappropriate sales conduct and/or pursuing consumers for debts, including when it knew contracts were created fraudulently.
The conduct included Optus allegedly putting undue pressure on some of these consumers to purchase a large number of products, including expensive phones and accessories, and not undertaking coverage checks to inform the consumer whether they would have Optus coverage where they lived.
It is alleged that Optus engaged debt collectors to pursue many of these consumers, despite knowing that they were subject to inappropriate or fraudulent sales conduct.
The alleged conduct involves 363 consumers from two Optus Darwin stores, 42 consumers from the Optus Mount Isa store and 24 individual consumers from store locations across Australia.
“We are taking this action against Optus and seeking consumer redress in relation to the hundreds of consumers affected by this alleged unconscionable conduct,” Ms Cass-Gottlieb said.
The ACCC began its investigation after receiving a referral from the Telecommunications Industry Ombudsman about concerns regarding Optus’ sales practices to consumers experiencing vulnerability and/or disadvantage.
The ACCC is seeking declarations and orders for penalties, non-party consumer redress, publication orders, a compliance program, and costs.
Optus’ Darwin stores conduct
The ACCC alleges unconscionable conduct at Optus’ two licensee-operated stores in Darwin, where nearly all staff allegedly engaged in inappropriate sales conduct, encouraged by senior store management, during a two-year period to June 2023. The conduct included not carrying out coverage checks, despite some of the 363 impacted consumers being First Nations Australians from regional, remote and very remote parts of the Northern Territory where there was no Optus coverage available.
The ACCC’s allegations include that Optus staff manipulated credit checks, oversold and overpriced accessories, and sold consumers phones and plans they could not afford at the Darwin stores.
Optus’ Mount Isa store conduct
The ACCC also alleges Optus acted unconscionably by pursuing debts for at least 42 consumers from Mount Isa and remote areas of the Northern Territory, despite some senior executives knowing that those debts related to contracts for goods and services which were fraudulently created by a staff member at a licensee-operated Optus store in Mount Isa, without the knowledge of the affected consumers.
Optus’ conduct to individual consumers
The ACCC alleges Optus acted unconscionably in its dealings with 24 individual consumers by engaging in inappropriate sales conduct. This included by applying undue pressure and inducing the consumers to purchase a large number of goods and services.
The alleged conduct includes claims that sales staff manipulated credit check results without the consumers’ knowledge to sell goods and services that they could not afford, while failing to explain the terms and conditions of contracts in an understandable manner. Despite knowing about this alleged conduct, Optus pursued debt collection activities in many cases, and referred and sold the consumers’ debts to third party debt collection agencies.
In relation to four of these consumers, the ACCC also claims that Optus made false, misleading or deceptive representations that particular goods were ‘free’ when that was not in fact the case.
“Many consumers suffered financial harm, incurring thousands of dollars of debt and non-financial harm, such as shame, fear, and emotional distress about the debts or being pursued by debt collectors,” Ms Cass-Gottlieb said.
“Thankfully many consumers were supported by financial counsellors, carers and other advocates who gave their time and effort to support consumers to eventually seek resolution of Optus’ conduct.”
“We will take appropriate enforcement action against breaches of the Australian Consumer Law, and we pay particular attention to conduct that disproportionately impacts consumers who are experiencing vulnerability or disadvantage.”
An example of the alleged conduct includes a person living with an intellectual disability which impacts their ability to speak and understand financial matters went into an Optus store and was sold an expensive phone, a business phone contract under a false ABN, a new NBN internet plan and accessories, though their disability was evident to Optus staff. The person did not want or need the majority of these items, and was upset and embarrassed about the unwanted and expensive items they were sold. When the person’s representative went to the store to return the items, the Optus staff refused to cancel the contracts and it was only through the intervention of a financial counsellor that Optus cancelled the contracts.
Background
Optus is Australia’s second largest telecommunications provider. It is a wholly-owned subsidiary of Singtel Optus Pty Ltd, a foreign owned private company.
In Australia, Optus’ stores are either:
- owned and operated directly by Optus RetailCo Pty Ltd; or
- owned and operated through third party licensees, through Retail License Agreements. For example, all Optus stores in the Adelaide region are owned and operated by Mavaya Pty Ltd, and all Optus stores in the Northern Territory, as well as several in regional Queensland, are owned and operated by Suntel Communications Pty Ltd.
Statement of claim
( )
The ACCC has commenced this proceeding with a Statement of Claim. The document available via the link contains the introduction section of the ACCC’s Statement of Claim in relation to this matter, which contains a summary of the ACCC’s case. We will not be uploading further documents.
