Telstra was penalised $50 million for unconscionable conduct spanning over the past 2 years and 7 months.
What is unconscionable conduct?
There is no precise legal definition, but it generally means conduct that is harsh, unfair or oppressive against conscience as judged by the norms of society.
What did Telstra do to get a $50m fine?
They signed up 108 Indigenous consumers to mobile contracts that they did not understand or could not afford.
Telstra admitted to acting unconscionably and accepted the fine.
This $50m fine is the second highest penalty for breaches of the Australian Consumer Law ever! The highest penalty was $125m given to Volkswagen (upheld on appeal in 2021).
It was found that Telstra staff:
- Changed credit assessments by saying customers were employed (when they weren’t)
- Took advantage of customers lack of understanding of the terms.
- Offered ‘free’ devices and did not explain how much they could be paying on post-paid contracts.
- Sold add-ons to customers that they didn’t want or falsely represented they were ‘free.’
- Sold ‘benefits’ that were already free.
- Signed customers up to multiple contracts on a single day.
- Did not take enough care in determining if the customer could afford the costs.
It was also found that Telstra’s board and senior executives were alerted to the conduct but failed to stop it.
Lessons for companies when dealing with customers:
- Ensure your terms and conditions aren’t too long, otherwise it will deter people from reading them.
- Make sure your terms and conditions are written in plain English so customers can understand. If they are too complicated, there is a high risk that customers won’t understand. If your existing terms and conditions are too complicated, ask a lawyer to simplify them.
- Train your staff to highlight the important terms and conditions to customers (such as fees) when speaking with them.
- Make sure your most important terms (fees, expiry dates etc.) are front and centre in marketing promotions. They shouldn’t be buried in fine print.
- Where customers do not speak English as a first language, offer additional support such as resources in their native language or access to an interpreter.
- Always take the time to ask customers if they understand the fees and obligations involved. Do not rush or pressure them to make a decision.
- Provide regular training to staff on ACL compliance, including the risks and serious consequences of non-compliance.
- If you are told about unconscionable behaviour by staff, take immediate action by stopping the behaviour and providing disciplinary action and/or training as necessary.
Key takeaway:
This highlights how important it is for businesses and its employees to comply with the ACL.
To find out more about your business compliance obligations, best practice or to get help with writing plain English terms and conditions, get in touch with us for a free discovery call here.