Optus fined $100m for selling mobile plans to deaf, mute homeless man and other vulnerable Australians

Australia’s second-biggest telco has been fined $100m after it sold plans to Australians it knew couldn’t afford them, including a deaf, mute homeless man and forging contracts with First Nations people.

Optus CEO Stephen Rue said the behaviour was inexcusable and unacceptable.

Optus has been hit with a $100m fine after it sold mobile phone plans to “vulnerable” to Australians it knew couldn’t afford them, including a deaf and mute homeless man, and created scores of fraudulent contracts with First Nations people.

It is one of the biggest penalties imposed on an Australian company, almost matching the $120m settlement Qantas struck last year over its “ghost flights” where it mislead customers by selling tickets for flights it had already decided to cancel.

Optus, Australia’s second-biggest telco, said on Wednesday it had agreed with the consumer watchdog to pay the penalty, which is now subject to Federal Court approval.

The ACCC sued Optus for unconscionable conduct and inappropriate sales practices that occurred between August 2019 and July 2023.

Chief executive Stephen Rue said the behaviour was inexcusable and unacceptable.

“I would like to sincerely apologise to all customers affected by the misconduct in some of our stores,” Mr Rue said.

“Optus failed these customers, and the company should have acted more quickly when the misconduct was first reported. I am leading the implementation of extensive changes across the company, with active responses to the issues raised well underway.

“However, there is much more to do as we work to regain our customers’ trust and improve support and protections for them, especially for those who are vulnerable.”

‘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.

In Mount Isa, the ACCC alleged 82 customer contracts with Optus appeared 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”.

ACCC chair Gina Cass-Gottlieb. Picture: Sam Ruttyn

In another case, Optus sold a plan to a 79-year-old man with Alzheimer’s disease — who died in 2022. He visited an Optus store in Rosebud in mid-2019, 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 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.

The ACCC said “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 said in its initial statement of claim.

Forged contracts

The damning 347-page document also revealed 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.

The ACCC alleged staff at Optus’ store in Mount Isa fraudulently created 82 customer contracts without the consumers’ knowledge.

The ACCC said in its initial statement of claim that senior executives were briefed on an investigation involving fraud at its Mount Isa store at a 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.

Staff sacked

Mr Rue – who started with the telco late last year – said Optus has also since made numerous executive and senior leadership changes, and disciplinary action has been taken, including, terminating retail sales staff who were found to be responsible for inappropriate sales practices.

“This is not what Optus stands for, and we will hold ourselves to a higher standard going forward,” Mr Rue said.

He said structural accountability changes have also been made, and new sales incentives have been introduced to increase quality control and customer experience metrics.

Optus has also agreed to pay $1m to support digital literacy initiatives for First Nations Australians.

Support offered

It is also hiring a number of financial counsellors to provide community-based support, and guidance in the remediation process. This will be provided free of charge.

Optus encouraged customers to call its customer care team on 1300 082 820 for further information or support.

Originally published as Optus fined $100m for selling mobile plans to deaf, mute homeless man and other vulnerable Australians