Optus has been handed a $100 million fine after the Federal Court found the telco engaged in unconscionable conduct when selling mobile phones and contracts to vulnerable Australians – adding another blow to a company already under pressure following its triple-zero outage last week.
The case and the court’s findings
The Australian Competition and Consumer Commission (ACCC) brought the case, with Optus admitting it breached Australian Consumer Law and agreeing to the penalty.
The conduct spanned from August 2019 to July 2023 across 16 Optus stores, impacting more than 400 consumers.
Justice Patrick O’Sullivan described the consequences as “profound,” pointing to “severe financial harm, emotional distress, and social shame” faced by affected customers.
Many were First Nations Australians, or people experiencing disadvantage such as disability, unemployment, limited financial literacy, or language barriers.
“Particularly damaging was the heightened risk of losing access to essential telecommunications services when faced with inflated service costs,” O’Sullivan said.
Vulnerable customers targeted
Examples of misconduct included pressuring people into buying products they didn’t want or couldn’t afford, failing to explain payment terms, selling to customers without Optus coverage, and misleading consumers into thinking items were free.
“Optus’s conduct in this case was truly appalling, and we welcome the substantial penalty imposed by the Court and the deterrence message that it will send,” ACCC deputy chair Catriona Lowe said.
She added: “During the course of our investigation we heard from many people who had not only experienced significant financial harm, but also emotional distress and fear after being pursued by debt collectors for long periods.”
Optus CEO Stephen Rue
System failures and sales incentives
The court heard Optus senior management was aware staff were engaging in inappropriate practices but failed to act quickly to stop them. The commission-based sales structure also risked incentivising poor behaviour, despite industry guidelines warning against such models.
In one case, the now-closed Mount Isa store pursued debts even though management knew the contracts may have been fraudulently entered into.
“A company of Optus’s size should have had better systems and controls in place to identify and stop this sort of behaviour,” Lowe said.
Compensation and reform
Alongside the fine, Optus has agreed to a five-year court-enforceable undertaking. This includes compensating impacted consumers and upgrading internal systems to prevent further breaches. The ACCC has encouraged anyone who believes they were affected to contact Optus.
The case follows similar action against Telstra in 2021, which was fined $50 million for unconscionable sales to First Nations customers.
Outage adds to Optus’ woes
The ruling comes days after Optus admitted a “human error” during a firewall upgrade caused its nationwide triple-zero outage. CEO Stephen Rue confirmed that the first step of the upgrade process – diverting calls to another part of the network – was not followed.
“There are no words that can express how sorry I am about the very sad loss of the lives of four people who could not reach emergency services in their time of need,” Rue said.
The incident, involving both Optus and Nokia teams in Australia and India, left around 480 customers unable to connect to emergency services. Optus has since commissioned an independent review, led by Kerry Schott, into the outage.