Telstra Compensates Customers for Unauthorised Billing Charges

Friday 5 October 2018 @ 10.26 a.m. | Legal Research | Trade & Commerce

A recent Australian Competition and Consumer Commission (“ACCC”) Media Release reports that Telstra Corporation Limited (“Telstra”) has so far refunded $9.3 million to 72,000 customers after it was found by the Federal Court of Australia (“the Court”) in April 2018 to have misled consumers in relation to its Premium Direct Billing (“PDB”) third-party billing service.

The refunds to affected consumers were as a result of court action being initiated by the ACCC – see ACCC v Telstra Corporation Limited [2018] FCA 571 (26 April 2018).


In March 2018, the ACCC commenced proceedings against Telstra in the Federal Court alleging that Telstra had made false or misleading representations to consumers in relation to its third-party billing service.

The Court found that Telstra misled customers and breached the Australian Securities and Investments Commission Act 2001 (Cth) (“ASIC Act”) when it charged customers for digital content, such as games and ringtones, which they unknowingly purchased.

The Court also found that in 2015 and 2016, Telstra did not adequately inform customers it had set the PDB service as a default on their mobile accounts. If customers accessed content through this service (even unintentionally), they were billed directly by Telstra.

The Judgment

In his April 2018 judgment, Justice Moshinsky ordered Telstra to pay penalties of $10 million for making false or misleading representations about charges for digital content, such as games and ringtones - see [para 17]:

“… I also consider the proposed penalties, totalling $10 million, to be appropriate penalties and will make orders to this effect. The conduct is, to my mind, at the serious end of the spectrum of contraventions of the false or misleading representation provisions of the ASIC Act …”

Telstra agreed to compensate consumers that had been affected by the billing issue. Customers who have since been refunded include those identified from internal complaint records and consumers who went to the industry ombudsman about the charges.

The Sydney Morning Herald (“SMH”) reports that:

“The problem for customers was that some content, videos and apps had a ‘subscribe now’ or ‘purchase now’ button that automatically added an expense to a Telstra customers’ phone bill. There was no PIN or other step required after clicking the option, which meant children or someone using the phone might inadvertently subscribe to a service. This service was stopped on March 3. Moshinsky also noted at [para 78] of his judgment:
“… In particular, Telstra’s design and implementation of the PDB service enabled customers to acquire PDB content without providing any verification of their identity or other confirmation of purchase (for example, the sending of a text message or providing a PIN number) and for content charges associated with the PDB content to be applied to the customer’s account.”

Comment from the ACCC

Commenting on the current action, 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 … 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.”

Speaking to the SMH, Mr Sims was quoted as saying:

 “… at one point, Telstra was fielding 10,000 complaints a month for this activity … I'd be more comfortable seeing [the total of customers refunded] at 100,000 … There will be more people who get refunded, they need to check their bills for charges they didn't know about …"

Comment from Telstra

The SMH also quotes a Telstra spokesperson as saying:

“… [they have] refunded approximately 71,500 customers who we have identified as impacted and contacted a further 272,000 potentially impacted customers asking them to contact us if they believe they were impacted and would like to accept our offer to refund. If our customers have any concerns about these charges on their account, they should contact us and we will deal with their concerns …”

While at [para 84] of his judgment, Justice Moshinsky noted:

“Telstra has afforded the ACCC a very high level of co-operation in these proceedings, and throughout the investigation. It has admitted that its conduct contravened s 12DB(1)(b) and (e) of the ASIC Act (SOAF, [93]-[95]). Telstra’s co-operation has saved the ACCC and the Court the cost and burden of litigating what would otherwise have likely involved a lengthy and expensive case. I accept the parties’ submission that Telstra is entitled to a substantial co-operation discount.”

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