Telstra Corporation Limited

The ACCC instituted proceedings on 26 November 2020 against Telstra Corporation Ltd (Telstra) alleging unconscionable conduct involving sales of post-paid mobile products to Indigenous Australian consumers in NT, WA and SA. 

Telstra has admitted that between 1 January 2016 and about 27 August 2018 sales staff from five Telstra licensed stores (TLS), namely Arndale (SA), Broome (WA), Alice Springs, Casuarina and Palmerston (NT), entered into contracts on Telstra’s behalf with 108 Indigenous Australian consumers (Affected Consumers) for the supply of post-paid mobile products in contravention of section 21 of the Australian Consumer Law, which is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth). 

These contracts were entered into, in circumstances that included TLS sales staff:

1. misrepresenting or failing to appropriately explain the nature and potential costs of products and services, including by falsely representing that consumers were receiving products for ’free’;
2. manipulating credit assessments, so as to be able to enter into post-paid contracts with consumers who would otherwise have failed Telstra’s credit assessment process and not have been approved for credit; and/or
3. taking advantage of Telstra’s substantially stronger bargaining position in relation to the Affected Consumers to sell products that were unsuitable and unaffordable for those consumers.

Telstra became increasingly aware of the occurrence of various aspects of the improper sales practices at the five TLS, the detriment to consumers, and that those practices affected Indigenous Australian consumers.  Despite this knowledge, as well as Telstra’s longstanding awareness that many Indigenous Australian consumers face challenges or have specific needs that are different to other Australians, Telstra did not put in place adequate and necessary controls to guard against the risk of such practices.

To resolve the matter, Telstra has consented to orders including declarations, pecuniary penalties totalling $50 million, payment of a contribution of the ACCC’s legal costs (to be determined by the Court), and has also offered the ACCC this court enforceable undertaking which provides for, amongst other things, consumer refunds and cultural awareness training for Telstra staff.

Novation

The Australian Competition and Consumer Commission entered into a Deed of Novation dated 19 December 2022 with Telstra Limited ACN 086 174 781 and Telstra Corporation Limited ACN 051 775 556 (Deed). 

The effect of the Deed is to substitute Telstra Corporation Limited with Telstra Limited as the appropriate corporate entity subject to the terms of the court enforceable undertaking accepted by the Commission from Telstra Corporation Limited dated 25 November 2020.  This follows a business restructure by Telstra which was completed on 1 January 2023.