The Federal Court has hit Telstra with a $50 million fine for its "unconscionable conduct” towards Indigenous customers.
The company admitted selling up to 108 remote Indigenous customers mobile plans they didn’t understand and couldn’t afford between 2016 and 2018, after an investigation by the Australian Competition and Consumer Commission in 2019.
“This conduct included manipulating credit assessments, misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers,” ACCC Chair Rod Sims said.
As a result, people were left with debts between $1000 and $20,000.
“The average debt here of these consumers was $7,500, which is a lot of money for people living in remote communities who don't have much income at all," Mr Sims said.
In response to the scandal, Reconciliation Australia revoked Telstra’s Reconciliation Action Plan, determining the communications company had failed to be a leader in the movement.
The group also launched their own inquiry into Telstra and said it found the company did not notify it of complaints that were part of the ACCC's investigation.
The $50 million penalty is the second-largest ever imposed for breaching Australian Consumer Law.
In a statement, Telstra CEO Andy Penn apologised to the Indigenous customers affected by his company’s conduct.
“We should have been more attuned to what was happening. We should have picked this up earlier,” read the statement.
It’s a sentiment Mr Sims agreed with.
“They were getting incredible reports from credible well-known people; who you should listen to when they speak,” Mr Sims said.
“But to be fair to them, when they did act they acted fulsomely,” Mr Sims said.
The company is continuing to remediate affected consumers, improve its existing compliance program, review and expand its Indigenous telephone hotline, and enhance its digital literacy program for consumers in certain remote areas.”
They also launched an Indigenous Policy Statement which details how Telstra employees should engage and support Indigenous communities.
“It is an important document, but I want to stress that words are easy but it is living up to them that is the real test,” Mr Penn said.
“It’s a test all of us at Telstra accept and are committed to passing.”.
Mr Sims hopes the $50 million fine will send a message.
“If we find behaviour like this from other telecommunications companies, we will come down very hard on it,” he said.