Optus misled customers over ‘Direct Carrier Billing’ charges

17 October 2018

The ACCC has commenced proceedings against Optus, alleging it made false or misleading representations to consumers in relation to its third-party billing service known as ‘Direct Carrier Billing’ (DCB).

Optus has admitted that it made false or misleading representations in contravention of the ASIC Act, and has agreed to apply jointly with the ACCC for orders from the Federal Court.

The proposed orders include declarations that Optus breached the ASIC Act, and for Optus to pay $10 million in penalties. The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.

Optus has also committed to offer refunds to customers affected by its conduct. It is possible that more than 240,000 Optus customers were affected.

Optus has admitted that it was aware, from at least April 2014, its DCB service led a significant number of customers to be charged by Optus for premium content such as ringtones, games, horoscopes, etc. that they did not want and had not agreed to buy.

Optus also admitted that it failed to adequately inform customers the DCB service was a default account setting and that if customers received premium content via their phone, even unintentionally, they would be billed by Optus for it.

“A substantial number of Optus customers were signed up to subscriptions for expensive, often unwanted content without being required to enter payment details or verify their identity, as occurs with many other online purchases,” ACCC Chair Rod Sims said.

“Many customers didn’t realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder’s knowledge.”

“Despite over 600,000 direct enquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections,” Mr Sims said.

“There was compelling need for safeguards to be put in place to stop customers paying for content like ringtones and games that they did not want, did not use, and had difficulty unsubscribing from, and Optus just ignored this.”

This court action follows a similar one against Telstra over its Premium Direct Billing (PDB) service, where it was ordered to pay $10 million in penalties.

“The ACCC is continuing its investigation into third party billing services by other carriers, and further enforcement action may well follow,” Mr Sims said.

The ACCC understands a total of $31million has been refunded to around 240,000 Optus customers to date, with Optus paying around $12 million directly and third party providers refunding another $19 million. Optus customers are encouraged to check their mobile accounts and, if they believe unauthorised charges have been applied under the DCB service, they should contact Optus to seek a refund.

Notes to editors:

The ACCC proceedings allege that Optus’ conduct contravenes the ASIC Act, as it concerns financial services and/or financial products.

The ACCC has a standing delegation of certain of ASIC powers and functions for the purposes of investigation and commencement and conduct of any proceedings in relation to matters involving financial products and services provided as part of, or in connection with, the supply or possible supply of telecommunications services.

Background:

Optus has operated the DCB service since May 2012, with around 2 million customers charged each financial year. Optus agreed to cease offering the DCB service on 24 August 2018 as part of resolving the ACCC’s investigation.

The DCB service allowed Optus customers to purchase digital content (DCB content) from third-party developers (but did not include content acquired from the usual app marketplaces like Google Play or the App Store). Charges were automatically applied to Optus’ customers’ pre-paid or post-paid mobile accounts. 

DCB content includes “premium” content services (such as news websites), downloadable applications (such as games or ringtones) and other content (such as voting in television programs).

The ACCC’s proceedings against Optus follow its recent court action against Telstra for its third party billing services for similar conduct.

Release number: 
208/18
ACCC Infocentre: 

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