‘Not good enough’: Telstra overcharges customers $21m for ‘inactive’ internet services

The communications watchdog says it has ‘lost patience’ with the nation’s biggest telco for significant billing errors that left small businesses out of pocket for over a decade.

The fine followed the regulator directing Telstra in September 2020 to comply with billing accuracy rules. Picture: NCA Newswire / Gaye Gerard

Telstra is refunding more than $21m to thousands of mostly small businesses after it charged for “inactive” internet services during an 11-year period.

The company has agreed to pay a $3.01m fine for breaching billing accuracy rules, which lead to more than 6500 customers being wrongly charged $2600 each on average. Telstra discovered and self-reported the breach.

It has already refunded $17.7m, including interest, with the remaining $3.4m to be repaid to customers by the end of the year.

Despite Telstra taking proactive steps to rectify the breach, Australian Communications and Media Authority chair Nerida O’Loughlin said she has “lost patience” with the company after a “series of significant billing errors”.

“Telstra has a history of incorrectly billing customers and it’s just not good enough,” she said.

“At a time when many small businesses are facing economic pressures, unaccounted costs can create very real stress and financial hardship.

“All telcos must have robust billing systems in place to ensure that consumers, including small businesses, are only paying for agreed and active services.”

The fine followed the regulator directing Telstra in September 2020 to comply with billing accuracy rules after it overcharged more than 10,000 customers almost $2.5m over a 12-year period.

A separate investigation found Telstra overcharged more than 11,000 customers about $1.7 million.

Telstra told the regulator that the billing issues were caused by the company failing to follow a series of steps in its ADSL internet service deactivation process.

But Ms O’Loughlin said: “Telstra is a major player in the Australian telco sector and it needs to continue to prioritise its billing compliance and get its systems in order”.

Telstra group executive for global business services, Dean Salter, apologised, saying the telco “let these customers down”.

“Getting something as important as billing wrong isn’t acceptable, and this is clearly not the experience we want to be providing our customers,” Mr Salter said.

“These ADSL billing errors occurred because we didn’t follow the proper deactivation process, including when some customers migrated to the NBN, which resulted in some customers being charged for inactive services. We’ve reached out to our customers to explain what went wrong and what we’re doing to fix it, including refunding them for the incorrect charges with interest.

“We know our customers deserve better, which is why we reported the issue to ACMA and conducted our own extensive investigation. We have put new controls in place to prevent this issue from happening again, including monthly checks if ADSL services are being used by customers before they’re billed.

Telstra has also agreed to report to the ACMA in six months about the effectiveness of these controls. If those controls fail and further breaches occur, ACMA warned it would sue Telstra in the Federal Court.

The fine is separate to a $306,360 penalty that ACMA issued Telstra last week or failing to provide details correctly to a public database used by emergency services to locate people in the event of a natural disaster.

Like the incorrect billing, that breach was also discovered during an internal investigation at the telco.