Optus dials up $10m ringtone fine following ACCC court action

In a win for the ACCC, Optus will cough up $10m over misleading phone users into unwittingly buying ringtones.

Optus CEO Allen Lew holds a 5G home broadband device.

Optus will pay a $10 million penalty to finally put to bed the troubles caused by its “Direct Carrier Billing” service which misled customers into unknowingly buying games, ringtones and other digital content.

The Australian Competition and Consumer Commission took Optus to court in October, with the telco admitting that its statements about its third-party billing service were in contravention of the ASIC Act. Optus had agreed to apply jointly with the ACCC for orders from the Federal Court.

The court on Wednesday ordered Optus pay a $10m penalty, which matches the financial penalty imposed on Telstra for its premium billing service last year.

Optus, which earned commissions on items sold through the DCB service, also admitted that it knew from at least April 2014 that many customers had mistakenly or unknowingly signed up for the service.

According to the ACCC, Optus earned about $65.8m in commissions for products sold through the DCB service, which launched in 2012, with customers charged about $195m for the content.

Despite receiving over 600,000 inquiries about the service, Optus failed to put in place appropriate identity verification safeguards, and referred customers who sought to query DCB service charges to third parties, the regulator said.

About 240,000 Optus customers have so far been refunded, with the telco forking out about $8m in refunds, with third party providers also providing $13m in compensation.

“We are pleased that the Court agreed that this conduct is simply unacceptable, and deserves a significant penalty,” ACCC boss Rod Sims said.

Optus has not offered the general direct billing service since August 2018 but it’s still active for a limited number of services for one-off content for TV shows, magazines and mobile gaming.