Telstra faces $10m fine for bill rip-off

TELSTRA is facing a $10 million fine for charging more than 100,000 customers for digital content, such as games and ringtones, which they unknowingly purchased.

The telco is being taken to the Federal Court by the Australian Competition and Consumer Commission over its third-party billing service known as Premium Direct Billing.

According to the ACCC, thousands of Telstra mobile phone customers unwittingly signed up to subscriptions or charges with third parties — or non-Telstra businesses — during 2015 and 2016 using the PDB service.

They were not required to enter payment details or verify their identity.

“Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from,” ACCC chairman Rod Sims said.

“Telstra knew that the Premium Direct Billing service it operated led to large numbers of its customers being billed for purchases made without their knowledge or consent.

“Despite this, Telstra continued to bill customers, making substantial revenue from the service at the expense of customers.”

The Premium Direct Billing scheme allowed customers to purchase online content and have it charged directly to their mobile bill.

It was launched in July 2013, with the telco earning about $61.7 million in net revenue from commissions on premium billing services charged to more than 2.7 million mobile numbers.

The ACCC alleges the telco failed to have the right safe- guards in place for customers and that it contravened the ASIC Act.

Telstra, which shut down the service earlier this month, admitted that refunding affected customers had proved difficult.

“Telstra has acknowledged its internal processes for dealing with these issues were inadequate and will refund customers affected by this conduct,” the ACCC said.

According to Telstra, it has already provided $5 million in refunds and will be contacting customers it identifies as being impacted.