Optus facing penalties over unwanted billing service
Optus is being taken to court for getting consumers to sign up to subscriptions for expensive and often unwanted content.
The competition regulator is taking Optus to court for making misleading comments to consumers and getting them to sign up to subscriptions for expensive and often unwanted content.
The Australian Competition and Consumer Commission is seeking $10 million in penalties from Optus, which has admitted that its statements about its third-party billing service known as “Direct Carrier Billing” (DCB) were in contravention of the ASIC Act, and has agreed to apply jointly with the ACCC for orders from the Federal Court.
According to the regulator, around 240,000 Optus customers have already received a total of $31 million in refunds from the telco and third party service providers. However, it’s likely that more than 240,000 Optus customers were affected.
ACCC boss Rod Sims told The Australian that he’s hopeful that the action taken by the regulator will make DCB services a thing of the past for consumers.
“I would think that companies won’t do this again but if they do the penalties will increase from November, from $10m to up to $100m, and once these kick in I hope it makes the companies take more notice,” he said.
According to the ACCC, Optus has admitted that it was aware, from at least April 2014, that its DCB service “led a significant number of customers to be charged by Optus for premium content such as ringtones, games, horoscopes, etc that they did not want and had not agreed to buy”.
The telco has also admitted that it failed to adequately inform customers the DCB service was a default account setting and that if customers received premium content via their phone, even unintentionally, they would be billed by Optus for it.
Mr Sims said the idea that customers were being signed up to unwanted content by default, without being required to enter payment details or verify their identity, was very problematic.
“Many customers didn’t realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder’s knowledge.”
He was also critical of the time taken by Optus to rectify the situation.
“Despite over 600,000 direct inquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections,” Mr Sims said.
“There was compelling need for safeguards to be put in place to stop customers paying for content like ringtones and games that they did not want, did not use, and had difficulty unsubscribing from, and Optus just ignored this.”
Optus has not offered the general DCB 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. However, they all of require express customer agreement before any purchase is charged to their account.
“We acknowledge that some customers may have inadvertently subscribed to content they did not want or could not easily unsubscribe from,” Optus’s head of regulatory affairs Andrew Sheridan said.
“Optus has committed to undertake a comprehensive review of customers affected by this activity and to provide refunds where appropriate, taking into consideration the fact that some customers may already have been refunded.”
The latest court action follows a similar case against Telstra over its Premium Direct Billing (PDB) service, where it was ordered to pay $10 million in penalties.
“The ACCC is continuing its investigation into third party billing services by other carriers, and further enforcement action may well follow,” Mr Sims said.
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