ACCC takes on Optus for targeting vulnerable people in remote areas

The consumer watchdog alleges the nation’s second-largest telco ‘manipulatively’ sold phones and plans to hundreds of customers that ‘they did not need and could not afford’.

The ACCC has commenced Federal Court action against Optus, alleging the telco sold phones and plans to vulnerable Australians, including in remote areas where it had no coverage. Picture: Diego Fedele/NewsWire

Optus manipulated credit checks to sell hundreds of vulnerable people phones and mobile plans that they couldn’t afford, the consumer regulator alleges, branding its conduct “unconscionable”.

The nation’s second biggest telco is facing its third scandal in two years after the Australian Competition and Consumer Commission announced it was suing it in the Federal Court.

The Singapore-controlled telco has been desperate to rebuild its reputation following 2022’s cyber attack and last year’s nation-wide outage, which cut off more than 10 million Australians, ultimately costing former chief executive Kelly Bayer-Rosmarin her job.

The ACCC alleges that Optus staff put undue pressure on customers including First Nations people and those with disabilities living in remote areas to buy phones and plans they could not afford, including in remote areas where they had no coverage.

The ACCC alleges the practice was incentivised by commission-based remuneration schemes and that management even turned a blind eye once they became aware of the conduct of sales staff.

ACCC chair Gina Cass-Gottlieb described the practice as completely “unacceptable”, saying most of the goods sold to the vulnerable consumers were products “they did not want, did not need and could not afford”.

“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,” Ms Cass-Gottlieb said.

The nation’s second-largest telco has sacked several workers in response to the claims, with interim chief executive Michael Venter apologising to impacted customers and saying Optus “deeply regrets” that it happened.

“Optus does not tolerate employee behaviour which takes advantage of customers,” he said.

“We have taken disciplinary action (including terminations) against staff whom we determined were responsible for this misconduct involving vulnerable customers.”

It comes after the telco was accused of causing both financial and emotional harm, sending debt collectors to the homes of those who couldn’t pay.

The ACCC alleged the conduct involved vulnerable customers, many of whom had mental disability, diminished cognitive capacity or learning difficulties or limited financial and legal literacy.

The ACCC announced on Thursday it had filed a statement of claim in the Federal Court seeking penalties and consumer remediation for the behaviour that allegedly occurred over a two-year period up until June 2023.

ACCC chair Gina Cass-Gottlieb. Picture: Aaron Francis

“We allege that Optus sales staff manipulated credit checks in order to oversell phones and plans to vulnerable consumers,” Ms Cass-Gottlieb said.

Some plans and products were sold without sales staff undertaking coverage checks, rendering the services useless to the consumers in some cases, the ACCC alleged.

“In some cases Optus then pursued debt collection activities against these vulnerable consumers. Consumers suffered financial harm of thousands of dollars but in addition emotional harm. The fear, shame and distress of the debts and of being pursued by debt collectors,” Ms Cass-Gottlieb said.

“We also allege that the conduct continued after management became aware of the failings in the system being exploited or manipulated by staff in terms of the credit checks and also that the commission-based remuneration system incentivised this bad sales behaviour.”

The alleged “unconscionable conduct” took place over a two-year period at two Optus stores in Darwin, with the ACCC alleging that nearly all staff engaged in the conduct that was “encouraged by senior store management”.

Staff had been encouraged to not conduct coverage checks, with 363 impacted consumers found to be First Nations Australians from regional, remote and very remote areas in the Northern Territory where the telco had zero coverage.

The total number of impacted consumers was 429, including 42 consumers who were sold goods and services by staff at Optus Mount Isa, in Queensland, about 350km from the Northern Territory border. About 24 consumers from other stores across Australia were also impacted.

Mr Venter said the telco’s customers deserved better and acknowledged that Optus had failed to meet an acceptable standard.

“The misconduct alleged by the ACCC is unacceptable, and completely out of step with our company values and we accept that we need to protect all customers, including those experiencing vulnerability, from this type of behaviour,” he said.

Optus’ own investigation narrowed down most of the transactions as having taken place at three Optus licensee-operated stores, Mr Venter said.

The watchdog’s investigation began after it was tipped off by the Telecommunications Industry Ombudsman, which received complaints about the telco’s sales practices.

Optus said it would gift the devices sold to vulnerable customers and refund all plans, “waiving outstanding debts”.

“We regret that we did not remediate more quickly in some of these cases,” Mr Venter said.

Originally published as ACCC takes on Optus for targeting vulnerable people in remote areas