Telstra has been ordered to pay $50 million for unconscionable sales to Indigenous consumers.

The Federal Court has ordered Telstra to pay the penalty for its conduct in selling mobile contracts to more than 100 Indigenous consumers across three states and territories, in proceedings brought by the ACCC. 

Telstra admitted that between January 2016 and August 2018, it breached Australian Consumer Law and acted unconscionably in the sale of post-paid mobile contracts, which consumers did not understand and could not afford.

“Sales staff in these Telstra-branded stores used unconscionable practices to sell products to dozens of Indigenous customers who, in many cases, spoke English as a second or third language,” ACCC Chair Rod Sims said.

“This conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers.

“Telstra’s board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them.

“The $50 million penalty imposed against Telstra is the second highest penalty ever imposed under the Australian Consumer Law. This is appropriate given the nature of the behaviour by Australia’s biggest telecommunications company, which was truly beyond conscience,” Mr Sims said.

In some cases, sales staff at the licensed stores failed to properly explain the potential costs of the contract to the consumers and falsely represented that consumers were receiving products for ‘free’.

In many instances, sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment process could purchase post-paid mobile products. This included falsely indicating that a consumer was employed when they were not.

Telstra says it is taking steps to waive the debts, refund money paid and put in place measures to reduce the risk of similar conduct in the future.

The ACCC has accepted a court-enforceable undertaking from Telstra over remediation to affected consumers, improvements to its existing compliance program, review and expansion of its Indigenous telephone hotline, and enhancing its digital literacy program for consumers in certain remote areas.

“We expect much better behaviour from large businesses like Telstra,  but all businesses in Australia have a responsibility to ensure sales staff are not breaching consumer law by manipulating or tricking consumers into buying products or services they do not need or cannot afford,” Mr Sims said.