Optus Faces Legal Action For Allegedly Exploiting Vulnerable Customers With Unaffordable Plans

Australia's consumer watchdog has initiated legal proceedings against telecommunications company Optus of "misconduct" in selling mobile phones and plans that targeted vulnerable customers, including many First Nations individuals, who could not afford them.

The Australian Competition and Consumer Commission's investigation (ACCC) accused the telecommunications company of "unconscionable conduct," violating Australian Consumer Law in dealing with 429 customers. Among these, 363 were served at Optus's Darwin stores, 42 were from the Mount Isa store, and 24 came from various locations across Australia.

According to ACCC, many of these consumers were in vulnerable situations, such as having a mental disability or reduced cognitive abilities, being financially dependent or unemployed, or lacking financial and legal knowledge. In addition, most customers were First Nations Australians from remote areas.

"This case concerns allegations of very serious conduct, as our case is that Optus sold goods to consumers experiencing vulnerability which they did not need, did not want and could not afford. We also allege that Optus' unconscionable conduct continued after management became aware of deficiencies in its systems that were being exploited by sales staff, and despite this, failed to implement fixes," ACCC Chair Gina Cass-Gottlieb said.

Optus was accused of indulging in improper sales practices, including pressuring consumers to buy many expensive products without checking if they had coverage in their area. The company allegedly used debt collectors to pursue these consumers, despite knowing that their contracts were created fraudulently. Additionally, the staff falsely claimed that certain goods were "free" when they were not, the ACCC alleged.

"Many consumers suffered financial harm, incurring thousands of dollars of debt and non-financial harm, such as shame, fear, and emotional distress about the debts or being pursued by debt collectors," Cass-Gottlieb said.

At times, the telco prioritized its own financial interests by withdrawing staff's commissions, but it failed to take necessary steps to compensate or support the consumers who were affected by its misconduct, ACCC stated.

Optus Interim CEO Michael Venter, meanwhile, stated that the company has taken disciplinary measures, including terminations, against staff responsible for the misconduct that occurred at three stores. He confirmed that the telco will continue to cooperate with the ACCC.

Communications Minister Michelle Rowland described the allegations as "very serious."

"Telcos must act in the best interest of their customers, particularly those experiencing vulnerability or disadvantage," she said. "Whether it be grocery prices or telecommunications selling practices, the Albanese government will continue to work with the ACCC to ensure fair outcomes for Australian consumers."