Optus admitted to a failure to act on unconscionable conduct within licensee stores, including one in Mount Isa, which fraudulently entered almost 50 consumers into contracts without their knowledge.
Appearing in the Federal Court on Tuesday (2 September), Steven Finch SC offered Optus’ “sincere apology” and acknowledgement that its senior team “should have acted quicker” to address unconscionable conduct across 16 different stores between 2019 and 2023.
The telecommunications giant admitted that staff at these stores put undue pressure on consumers, failed to appropriately explain relevant terms and conditions, sold products they knew the consumer could not afford, and misled them about “free” goods.
The court heard many of these consumers were First Nations, lived in rural or remote areas, and were vulnerable due to a disability.
In addition to taking over the management of 34 stores and employing a compliance officer to report directly to the CEO and board, Optus has given an undertaking to compensate consumers and donate $1 million to a First Nations digital literacy organisation.
This is on top of agreeing with the Australian Competition and Consumer Watchdog (ACCC) to pay a total penalty of $100 million, but the Federal Court will have final say on those orders.
The Federal Court was told one of the affected consumers had an intellectual disability that meant she had little understanding of money or written documents. Her finances, including the disability pension, were controlled by the public trustee of South Australia.
On multiple days, the consumer entered a store and was sold several phone plans, accessory bundles and device protection services. In total, she entered seven contracts with Optus.
For each occasion, Optus submitted multiple internal credit checks to ensure her approval, which circumvented its own processes. The staff also inputted false information, including listing her occupation as “not supplied” and residential address as “not provided”.
Despite the consumer’s mother providing information about her disability, Optus only offered discounts that were still unaffordable.
A second consumer was deaf and mute when he was sold seven contracts between May and November 2021, each of which was not explained in a way he was “capable of understanding”.
For several months, the consumer support coordinator made multiple attempts to resolve the issue, but struggled to do so. At one point, an Optus staff member requested to speak directly to the consumer, which was not possible given his disability.
In respect of a now closed Mount Isa store, Optus pursued debts in circumstances where senior management was aware that the debts related to contracts that had been entered into without the knowledge of the affected consumers, many of whom were First Nations.
Junior counsel for ACCC said the store manager conducted multiple credit checks until he received an approved response, including by changing personal details and adding false signatures.
Optus then sold the debt to third-party debt collectors and did not pause this until July 2024, despite retaining a contractual right to purchase back and waive the debts if evidence pointed to it not being properly incurred by the affected consumers.
One consumer said she received 831 calls within a three-year period.
Also appearing for the ACCC, counsel Paul Duggan said there was an internal review following the $50 million fine imposed on Telstra for unconscionable conduct. It related to the mobile phone contracts sold to more than 100 Indigenous consumers between 2016 and 2018.
The internal review was “significant” because it showed Optus was aware of the conduct and had identified several of its own issues, including a lack of specific training on handling vulnerable consumers and the resolution of their complaints.
Duggan said this was “setting alarm bells off”.
On penalty, Duggan said it is critical that the fine has a “sting in it” so that it sits above the general cost of doing business.
Justice Patrick O’Sullivan has reserved judgment.
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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