Optus sold thousands of dollars worth of phones and accessories to deaf, mute homeless man and scores of other vulnerable Australians: ACCC

Optus sold mobile phone plans to ‘vulnerable’ Australians — including a deaf, mute homeless man and an elderly man with Alzheimer’s — the ACCC has alleged.

The Australian Competition and Consumer Commission has released the details of its unconscionable conduct case against Optus. Picture: Gaye Gerard

Optus sold mobile phone plans to “vulnerable” Australians including a deaf and mute homeless man and an elderly man with Alzheimer’s disease, who later collapsed in one of its stores, while creating scores of fraudulent contracts with First Nations people, the consumer watchdog has alleged.

The Australian Competition and Consumer Commission is suing Optus for unconscionable conduct, saying it not only sold products to people it knew couldn’t afford them, but sold their unpaid bills to debt collection agencies.

It even sold debts to third parties when Optus senior management and its parent Singtel knew some consumers had no knowledge of the contracts, which appeared forged.

The damning 347-page document also reveals a tactic known as ‘service dripping’ — a form of “credit check stacking” — to sell products to vulnerable Australians it knew couldn’t afford them, with senior staff, including a store manager, training other employees in the practice.

Optus — which has since apologised to consumers — also “dismantled” its Profit Protection Team responsible for investigating suspected compliance issues during the height of the allegations, despite protestations from staff, the ACCC alleges.

‘Unfair sales tactics’

In one case, Optus staff at Westfield Marion in Adelaide sold a homeless man — who lived with deafness and was mute, with parts of his finger and hands amputated — thousands of dollars worth of mobile phones and accessories he could not afford in May, 2021.

The man, who died in May 2023, was on a disability pension of $882.20 per fortnight and communicated via sign language. The ACCC said “at no point” did Optus staff explain the terms of the contract before he signed it.

Optus chief executive Stephen Rue as launched a review “to ensure that the necessary checks and accountabilities are in place to stop this type of misconduct”. Picture: Britta Campion

“Optus staff engaged in unfair sales tactics in transactions with (the man) by selling (him) multiple mobile phones and accessories that the Optus staff knew or ought reasonably to have known that (he) did not need, could not operate, and could not afford,” the ACCC said.

The regulator says “as a result of the unconscionable conduct, many of the vulnerable consumers suffered financial harm, incurring thousands of dollars in debt”, shame and emotional distress, with customers being pestered by debt collection agencies.

One customer received at least 831 calls from a debt collector over a two-and-a-half year period.

“The alleged conduct took place in circumstances in which Optus senior management became increasingly aware that Optus staff were engaging in inappropriate sales conduct,” the ACCC wrote in its statement of claim, obtained by The Australian.

“However, in most instances, Optus failed to take steps to fix the deficiencies in its systems which allowed the conduct to occur or continued to delay and/or de-prioritise fixing those deficiencies.”

New Optus chief executive Stephen Rue, who started in November, has expressed disappointment over allegations the telco manipulated credit checks.

“It’s important to me that we can all be proud to work for Optus and I will always be focused on ensuring we are a company that is known for doing the right thing — especially for our customers,” he told staff last month.

The telco is yet to file its defence but a spokeswoman said Mr Rue has launched an internal review which will include “investigating individual cases to ensure that the necessary checks and accountabilities are in place to stop this type of misconduct”.

Optus says during the past three years — including during former CEO Kelly Bayer Rosmarin’s tenure — it has “taken steps to improve vulnerable customer support”.

Senior management the ACCC mention includes former chief executive Kelly Bayer Rosmarin - who was appointed in April 2020 - general manager Frances Martin, vice president of public and regulatory affairs Andrew Sheridan, fraud risk director John McRae and corporate assurance director Kevin Chuah — who were briefed on an investigation involving fraud at its Mount Isa store at meeting where broader risks to the company were discussed. As a result, Optus clawed back incentive based commissions paid to franchisees named in the investigation to send a message that such behaviour was not acceptable.

Forged contracts

At Mount Isa, the ACCC alleges 82 customer contracts appear to have been fraudulently completed without consumer knowledge. “The majority of affected consumers were of First Nations heritage and would be considered ‘vulnerable’ Australians living in remote parts of the country”.

“It appeared that the Optus staff member, who was also the store manager of the Optus Mount Isa Store, had conducted multiple credit checks from the affected consumers until he received an approved response — being a form of credit check stacking.”

But, Optus sold outstanding debts to a third party factoring agency, despite an internal investigation finding contracts “appeared to have been entered into fraudulently without consumer knowledge”.

“From at least February 2020, Optus, including through to its senior management, knew or ought to reasonably have known that each of the consumers were in a substantially weaker bargaining position relative to Optus, including because the consumers did not know about the contracts and were First Nations persons living in remote areas,” the ACCC said.

At Mount Isa, the ACCC alleges 82 customer contracts appear to have been fraudulently completed without consumer knowledge.

Of the 42 affected Mount Isa consumers, 40 had defaults listed against their name with credit reporting bodies. None of these default listings were requested by Optus to be removed until 2024, the ACCC said.

“In at least one instance, a Mount Isa affected consumer, who had repaid in full the asserted debt connected with the Mount Isa investigation, had been negatively impacted by the default listing under her name when seeking credit to purchase a car in 2024.”

‘You don’t need training to recognise dementia’

At the other end of the country, a then 79-year-old man with Alzheimer’s disease — who died in 2022 — visited an Optus store in Rosebud in mid-2019. He was carrying a Telstra-branded mobile phone, which cost $40, and he couldn’t remember his phone number, which was taped on the side of the device along with his daughter’s number.

The ACCC said he only used his phone for calls and texts and had been with Telstra for decades. He was suffering from hallucinations and paranoia at the time, the ACCC said, and Optus staff sold him a $30 My Plan Plus 12M SIM plan.

“Optus staff knew or ought to have reasonable to have known that he was vulnerable and only had a basic understanding technology and it would have been apparent to Optus staff dealing with (him) that he had difficulty remembering information about himself and that may have been due to his health conditions,” the ACCC said.

Optus staff sold a mobile phone plan to a man with Alzheimer’s disease.

Optus later sent the man bills, saying he owed $75 by January 2020. His daughter later visited the store to alert staff about her father’s health but was told he would have to cancel the contract in person.

The man later collapsed in the Optus store after he had been there with his daughter for about three hours. Despite saying his plan would be cancelled and he’d be refunded, Optus continued to issue bills until September 2020, and contracted a debt collection agency.

Between July 23, 2020 and at least September 14, 2020, his daughter “received dozens of text messages and calls from Commercial Credit Control on behalf of Optus”.

A senior Optus staff member at the Rosebud store told his daughter “the young Optus staff member” who had sold her father the mobile phone plan “should not have to recognise dementia as part of his job and there was no Optus training in that respect at his age”.

The man’s daughter replied: “you don’t need to be trained, it’s obvious”. After lawyers got involved, Optus offered to pay the man $5000 as a goodwill gesture.

“Given we do not believe that Optus has acted in contravention of any law, code or guideline, we do not consider your client has a legal right to compensation,” Optus said when it made its offer.

Optus apologises

An Optus spokeswoman said: “We are deeply sorry to all customers affected by the misconduct highlighted by the ACCC and for the distress caused.

“We fell far short of meeting the standards our customers deserve and expect in these cases. We need to do better, and we will.

“The misconduct involving customers, many of whom were vulnerable, is unacceptable and totally out of step with the values of Optus as a company,” the spokeswoman said.

“The majority of the misconduct identified occurred at three licensee-operated Optus stores and disciplinary action has been taken, including terminating staff who were determined to be responsible.

“We are remediating affected customers — providing refunds, waiving outstanding debts and enabling them to keep devices. We are working hard to fast-track any outstanding remediation as a matter of urgency.”

The spokeswoman said any employee taking advantage of customers is unacceptable.

“We are looking at all the allegations the ACCC has made very carefully, including the knowledge of senior management. Our specialist care team will be boosted with additional resources to provide more support for vulnerable customers, and we are increasing our focus on working with partners, community groups and financial counsellors to improve service standards for customers in need.

“Customer satisfaction measures have now been incorporated into sales commissions or remuneration in all retail stores, and we are also in the process of incorporating new compliance metrics. In the last three years the company has taken steps to improve vulnerable customer support by introducing a dedicated specialist care team, extra training for frontline staff, tighter and more robust credit checks and new customer advocacy programs.

“We know there is much more work to do, and we will continue to engage with financial counsellors and community groups across Australia to ensure we do better for vulnerable customers in the future. We continue to engage fully with the ACCC with regard to these matters.”