Telstra has been slapped with a $10 million fine from the Australian Competition and Consumer Commission (ACCC) for charging mobile customers for content without their knowledge.
The Federal Court ordered Telstra to pay $10 million for making false or misleading representations to customers in relation to a third-party billing service.
This service, known as Premium Direct Billing, was applied to more than 100,000 customer accounts and charged them for digital content including games and ring tones which they had purchased unknowingly.
It was found that in 2015 and 2016, Telstra had set the Premium Direct Billing service as a default on customer mobile accounts with customers billed even if they accessed content unintentionally.
Telstra says it will assess complaints about the PDB service and offer refunds where it is obvious that the customer had signed up to the PDB content without their consent.
The ACCC took Telstra to the Federal Court in March and it was here where it was revealed the company had never told customers that PDB was on their accounts by default.
Despite the hefty $10 million fine, Telstra has still accrued almost $62 million in revenue from the PDB service before the end of last year.
But the court also decided Telstra must now stop operating the PDB service completely.
When Justice Moshinsky passed down his ruling he said senior management at Telstra had not done enough to deal with the issue.
“The fact that the steps were inadequate was broadly known within Telstra, including at senior levels,” he said.
ACCC Chairman Rod Sims said: “Thousands of Telstra mobile phone customers unwittingly signed up to subscriptions without being required to enter payment details or verify their identity.
“By introducing and operating the Premium Direct Billing service, Telstra generated substantial profits by exposing customers to unauthorised charges.
“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone.
“The $10 million penalty imposed by the court recognises the seriousness of Telstra’s conduct.
“In the ACCC’s view such conduct falls below community expectations for appropriate corporate behaviour.”
The ACCC encourages Telstra customers to check their mobile account and if they believe unauthorised charges have been applied under the PDB service, they should contact Telstra on 13 22 00.