Telstra refunds $9.3m to 72,000 customers

28 September 2018

Telstra has refunded $9.3 million to 72,000 customers it misled in relation to its ‘Premium Direct Billing’ (PDB) third-party billing service, according to a report it provided to the ACCC.

In April 2018, the Federal Court ordered Telstra to pay penalties of $10 million for making false or misleading representations about charges for digital content, such as games and ringtones.

Telstra also committed to undertake a consumer remediation program, which has resulted in the $9.3 million of refunds to date.

“We are pleased to see so many customers refunded by Telstra. It’s clear a large number were charged for content like ringtones and wallpapers that they did not want, did not use, and had difficulty unsubscribing from,” ACCC Chair Rod Sims said.

“Following our action, Telstra has paid close to $20 million in penalties and refunds. This should serve as a warning to all telecommunication providers that misleading and deceiving customers will result in serious consequences.”

Telstra committed to providing refunds to customers it could identify in its complaint records and those who contacted Telstra or the Telecommunications Industry Ombudsman directly.

Telstra customers who believe unauthorised PDB charges were applied to their accounts or prepaid service are encouraged to contact Telstra directly on 1800 007 763 (post-paid customers), 1800 007 413 (prepaid customers) or 1800 007 830 (business customers).

“We’d encourage current or former Telstra customers to contact Telstra for a refund if they believe there were unauthorised charges on their account because of the PDB service,” Mr Sims said.

“The ACCC is also conducting a detailed investigation into the third party billing services of other carriers and further enforcement action may well follow.”

Notes to editors:

The $9.3m of refunds recently reported by Telstra is in addition to at least $5 million in refunds paid by Telstra or third parties to Telstra’s customers during the operation of its PDB service.

The PDB service allowed customers to purchase digital content from third-party developers that sell their content outside usual app marketplaces like Google Play or the App Store. Charges were automatically applied to customers’ pre-paid or post-paid mobile accounts. Telstra discontinued its PDB service on 3 March 2018.

In March 2018, the ACCC commenced proceedings against Telstra in the Federal Court.

In April 2018, Telstra admitted that it had misled consumers, consented to orders and made joint submissions with the ACCC in relation to penalties. Telstra also committed to offering refunds to affected customers and reporting to the ACCC.

Background:

In April 2018, the ACCC and Telstra agreed on the following facts to be presented to the Federal Court:

  • Until October 2017 Telstra had earned about $61.7m in net revenue from commissions on premium billing services charged to more than 2.7 million mobile numbers.
  • Telstra did not adequately inform customers it had set the PDB system as a default on customers’ mobile accounts and that if customers accessed content through the PDB service, even unintentionally, they would be billed directly by Telstra.
  • Telstra was aware from early 2015 to at least June 2016, not least because it received a large number of calls disputing such charges, that the operation of the PDB service had led to a significant number of its customers unintentionally purchasing and being billed for PDB content subscriptions without their knowledge or consent.
  • Telstra failed to implement the identity verification safeguards for the PDB service which it used for other third party subscription services to authorise the charges (such as the customer entering a PIN or signing into an account).
  • Telstra was aware that family members such as children were at risk of inadvertently subscribing on a family member’s phone.
Release number: 
196/18
ACCC Infocentre: 

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