Telco debt targeted

Better regulation is needed to stamp out high-pressure sales

In recent years consumer groups have called for internet services to be regulated in the same way as water, gas and electricity. On the surface this makes sense, especially as more utility providers bundle their services on the one bill.

The case for better regulation becomes even stronger when Michael Lavarch, the independent chair of the Telecommunications Industry Ombudsman (TIO), says that consumers “rightly consider telecommunications as an essential service that allows them to participate effectively in the economy and to enjoy the possibilities communication networks offer”.

Throughout 2019, the telco ombudsman has cracked down on providers using pressure sales tactics that eventually drive unnecessary consumer debt. In the first six months of 2018, the TIO received more than 7400 complaints from people who had problems managing their telecommunications debt. This represented 10% of the total complaints in that period.

So if you complain to the TIO, what can you expect in return? Can it wipe the debt on your phone and internet bills after a pressured sale? Not always.

According to the TIO’s report for 2018-19, the most common financial outcome was a bill adjustment, followed by a debt or fee reduction or waiver.

The median value in financial outcomes was $405. The most common non-financial outcome for consumers or small businesses was an explanation or assistance, followed by cancellation or change to a contract, service or plan.

The ombudsman points out that where consumers default on their phone or internet plan due to significant debts, they may be charged for late payment, early termination of the contract and the costs of debt collection. Debts often amount to thousands of dollars.

Consumers can also face suspension or disconnection of vital services, debt collector stress and default listings on their credit report.

The good news is complaints about phone and internet services decreased 21.1% in the last financial year, with a total of 132,387 received.

However, unresolved complaints – where the consumer and provider could not reach resolution – took longer to close. Last financial year, 47% of escalated complaints were closed within 60 days, compared with 77% in to 2017-18.

Darren Snyder