Optus fined $10 million for misleading customers

Optus has refunded about $8 million so far to customers who unknowingly bought digital content through its third-party billing service. Photo: Justin McManus.
Optus has refunded about $8 million so far to customers who unknowingly bought digital content through its third-party billing service. Photo: Justin McManus.

TELECOMMUNICATIONS giant Optus has been ordered to pay $10 million for misleading customers over digital purchases. 

The Federal Court handed down the fine for Optus’ treatment of customers who unknowingly bought games, ringtones and other digital content through its third-party billing service.

Optus admitted the company misled consumers and breached the ASIC Act when it billed customers for third party-produced content which they mistakenly bought or subscribed to through its “direct carrier billing” (DCB) service.

Further, it admitted it did not properly inform customers that the DCB service was a default setting on their accounts, and that they would be billed directly by Optus for any content bought through the service, even unintentionally.

“Optus has committed to providing refunds to affected customers and has already provided refunds to many of those customers,” the company’s regulatory and public affairs vice-president Andrew Sheridan said.

“Optus once again apologises to affected customers and reminds them to contact Optus to discuss their circumstances via our Complaints Handling Form or through Managing Third Party Content.

“Optus ceased offering the DCB service from August 24, 2018, other than a limited number of services for one-off content purchases, all of which require express customer agreement to each purchase being charged to the customer's Optus account.”

According to the Australian Competition and Consumer Commission (ACCC), which investigated the telco, Optus knew from at least April 2014 that many customers were being billed for DCB content they had mistakenly or unknowingly signed up for.

The DCB service allowed a purchase or subscription to be confirmed and charged to a customer’s bill after just one or two clicks on a web browser.

Despite receiving more than 600,000 enquiries about the service, Optus failed to put in place appropriate identity verification safeguards, and referred customers who sought to query DCB service charges to third parties.

Many customers then encountered significant difficulties in cancelling the purchases and obtaining refunds from the third parties.

The $10 million penalty is one of the highest imposed by the court and equals the penalty paid by Telstra last year after it admitted to similar conduct.

ACCC chair Rod Sims said the conduct was “simply unacceptable”.

“In many cases, Optus customers had no idea they were buying anything, and certainly did not need or want the content for which they were being charged,” Mr Sims said.

“Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints.”

​About 240,000 Optus customers have so far been refunded. Optus has paid about $8 million in refunds and third party providers another $13 million.

Customers are encouraged to check their Optus mobile account and, if they believe unauthorised charges have been applied under the DCB service, they should contact Optus on 133-937.